We are all in the same boat: The welfare and carbon abatement effects of the EU carbon border adjustment mechanism

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Relevance for climate-economy modeling and carbon leakage research.

🏢実務担当者:Corporate sustainability teams should assess CBAM implications for supply chain carbon costs and trade exposure.

🏛政策担当者:Policymakers need to consider CBAM's distributional effects and the case for harmonized carbon pricing.

: Amid the escalating global climate crisis, the European Union (EU) has assumed a prominent role by introducing the Carbon Border Adjustment Mechanism (CBAM). This initiative aims to bolster climate action and mitigate carbon leakage. Nevertheless, considerable debate surrounds the practical efficacy of this measure and its conformity with World Trade Organization (WTO) regulations. This paper's objective is to quantitatively evaluate the welfare and carbon abatement effects of CBAM on the EU and other prominent economies. We develop a comprehensive multi-country, multi-sector general equilibrium model that incorporates EU carbon tariffs, global production networks, and carbon emissions to achieve this goal. The estimation of key parameters is conducted through a structural methodology that directly evaluates the impacts on welfare and carbon emissions resulting from unilateral or multilateral low-carbon policies. The analysis revealed that CBAM would enhance the welfare of the EU, Japan, South Korea, Norway, Switzerland, and the United States. Conversely, all other economies would experience a reduction in welfare, with Russia suffering the most significant loss and China the least. Furthermore, despite CBAM's effective global carbon emission reduction, its impact on the EU's domestic carbon reduction is limited. Counterfactual analyses indicate that global carbon emissions decrease in scenarios involving a globally standardized carbon pricing mechanism, China's elevation of carbon pricing alongside a carbon tariff, and the European Union's extension of taxation to all sectors. However, these scenarios result in substantial disparities in welfare levels among countries, with the most substantial reduction in global carbon emissions occurring exclusively with a globally harmonized carbon price, accompanied by the

• semanticscholar https://mpra.ub.uni-muenchen.de/118978/1/MPRA_paper_118978.pdffirst seen 2026-06-02 05:11:49 · last seen 2026-06-03 05:15:17