31.01.2024

CBAM – a game changer for global carbon reduction policies?

Does the EU’s Carbon Border Adjustment Mechanism CBAM make countries around the world adopt more climate friendly policies? Or is it only protecting European industries from global competition? What policy changes can be observed with major trading partners of the EU?

CBAM will enter into effect in 2026, requiring importers of carbon-intensive products into the EU to pay a carbon price to level up with the EU emission trading system. This is intended to avoid carbon leakage and keep European industries competitive. CBAM should thus also incentivise third countries to adopt more climate friendly policies.

The briefing covers a series of third countries, from the US, China and India, to Russia, Ukraine, the Western Balkan countries, Turkey, the United Kingdom, Canada, South Korea, Australia, Japan, and some Latin American countries. How is their export structure towards the EU impacted by CBAM, what strategies do these countries adopt?

About the author: Julian Parodi is a former research associate at FES Just Climate and now working with EPICO KlimaInnovation.

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