Research Article
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Effects of the EU’s CBAM on Eurasian Countries

Year 2023, , 675 - 696, 30.12.2023
https://doi.org/10.26650/ISTJECON2023-1226280

Abstract

Starting from 2026, imports of certain goods to the EU will be subject to a special fee that is based on the carbon content of the imported products. Consequently, the EU’s trade partners have tried to predict the possible risks of such a change in the European trade policies. Given this, the article focuses on the analysis of the impact of the EU’s Carbon Border Adjustment Mechanism (CBAM) on different countries. In particular, the current research aims to assess CBAM payments for imports of products from Eurasian countries to the EU. Despite current trends in the EU’s trade policy, the largest CBAM payment is estimated to be for Russia. Analysis shows that the highest share of CBAM payments in exports to the EU is estimated to be for Uzbekistan, Georgia, Tajikistan and Belarus. The biggest share of CBAM payments falls on imports of metals, fertilisers, electricity and oil. However, these results should be treated with caution since some Eurasian countries are missing high quality data on the carbon intensity of the produced goods. In this light Eurasian countries should adopt a transparent system for collecting and publishing detailed information on the embedded emissions of different products. Adoption of CBAM by the EU may lead to the implementation of the analogous mechanisms by trade partners of the Eurasian region. Therefore, the decrease of carbon intensity of products and “green” transition should be among the top priorities of the industrial and economic policies of these countries.

JEL Classification : F13 , H23

References

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  • Pietzcker, R.C., Osorio, S., & Rodrigues, R. (2021). Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector. Applied Energy. No. 293. https://doi.org/10.1016/j.apenergy.2021.116914. google scholar
  • Roshydromet. (2021). National inventory report 1990 - 2019: anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol. google scholar
  • Venmans, F., Ellis, J., & Nachtigall, D. (2019). Carbon pricing and competitiveness: are they at odds? Climate Policy, 20:9, pp. 1070-1091. https://doi.org/10.1080/14693062.2020.1805291. google scholar
  • Kaitila, V., Kuusela, O. P., Kuusi, T., Pohjola, J., & Soimakallio, S. (2022). Revisiting the economic impacts of the EU CBAM on Finland and the EU. [Web log post]. Retrieved from https://www. etla.fi/en/publications/reports/euroopan-komission-ehdottaman-hiilirajamekanismin-vaikutuksia-suomessa-ja-eussa/. google scholar
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  • Weitzel, M., Hübler, M., & Peterson, S. (2012). Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment. Energy Economics, 34, S198 - S207. https://doi. org/10.1016/j.eneco.2012.08.023. google scholar
  • World Bank. (2022a, July 19). Carbon pricing dashboard. [Web log post]. Retrieved from https:// carbonpricingdashboard.worldbank.org/ google scholar
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  • Yakovlev I. A., Kabir L. S., Nikulina S. I. (2022). The national strategy for financing the energy transition: assessing opportunities and finding solutions. Financial Journal, vol. 14(5), pp. 9-24. https://doi.org/10.31107/2075-1990-2022-5-9-24. google scholar
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Year 2023, , 675 - 696, 30.12.2023
https://doi.org/10.26650/ISTJECON2023-1226280

Abstract

References

  • Böhringer, C., Balistreri, E., & Rutherford, T. (2012). The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study. Energy Economics, 34, S97 - S110. https://doi.Org/10.1016/j.eneco.2012.10.003. google scholar
  • Butterworth, P. (2021, October 27). EU 2030 emission targets need a carbon price of ~€140 /tCO2. [Web log post]. Retrieved from https://sustainability.crugroup.com/article/eu-2030-emission-targets-need-carbon-price-euro140-tco2. google scholar
  • Condon, M., & Ignaciuk, A. (2013). Border carbon adjustment and international trade: a literature review. OECD Trade and Environment Working Papers, OECD. google scholar
  • Council of the EU. (2022). Draft regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism - Draft approach. Retrieved from https:// data.consilium.europa.eu/doc/document/ST-7226-2022-INIT/en/pdf. google scholar
  • Council of the EU. (2023). Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism (CBAM) - Compromise text. Retrieved from https://data. consilium.europa.eu/doc/document/ST-16060-2022-INIT/en/pdf. google scholar
  • Dong, Y., & Whalley, J. (2009). How large are the impacts of carbon motivated border tax adjustments? Working Paper Series, NBER. google scholar
  • Durant, I., Contreras, C., Hamwey, R., Mott, G., Nicita, A., Peters, R., . . . Vivas, D. (2021, July 14). A European Union carbon border adjustment mechanism: implications for developing countries. UNCTAD. [Web log post]. Retrieved from https://unctad.org/system/files/official-document/ osginf2021d2_en.pdf. google scholar
  • Ember-climate. (2022, August 19). EU carbon price tracker. [Web log post]. Retrieved from https:// ember-climate.org/data/carbon-price-viewer/. google scholar
  • Eur-Lex. (2006). Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine. [Web log post]. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02006R0765-20220604. google scholar
  • Eur-Lex. (2014). Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine. [Web log post]. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0833. google scholar
  • Eur-Lex. (2021). Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council. [Web log post]. Retrieved from https://eur-lex.europa.eu/eli/reg_del/2019/331/oj. google scholar
  • European Commission. (2021). Proposal for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism. [Web log post]. Retrieved from https://ec.europa.eu/info/sites/default/files/carbon_border_adjustment_mechanism_0.pdf. google scholar
  • European Commission. (2022, June 03). Russia’s war on Ukraine: EU adopts sixth package of sanctions against Russia. [Web log post]. Retrieved from https://ec.europa.eu/commission/ presscorner/detail/en/IP_22_2802. google scholar
  • European Parliament. (2022). Amendments adopted by the European Parliament on 22 June 2022 on the proposal for a regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism. [Web log post]. Retrieved from https://www.europarl. europa.eu/doceo/document/TA-9-2022-0248_EN.pdf. google scholar
  • Grübler, J., Ghodsi, M., & Stehrer, R. (2021). Import demand elasticities revisited. The Journal of International Trade & Economic Development, 31:1, pp. 46-74. https://doi.org/10.1080/0963819 9.2021.1951820. google scholar
  • Haites, S. (2018). Carbon taxes and greenhouse gas emissions trading systems: what have we learned? Climate Policy, 18(8), pp. 955 - 966. https://doi.org/10.1080/14693062.2018.1492897. google scholar
  • ITC. (2022, July 19). Trade map. [Web log post]. Retrieved from https://www.trademap.org/. google scholar
  • Kennedy, K., Obeiter, M., & Kaufman, N. (2015, April 30). Putting A price on carbon: a handbook for U.S. policymakers. world Resource Institute Working Paper, WRI. google scholar
  • Krause, E., & Obeiter, M. (2015, June 30). Carbon pricing gains popularity with governments, Businesses. [Web log post]. Retrieved from https://www.wri.org/insights/carbon-pricing-gains-popularity-governments-businesses. google scholar
  • Kuik, O., & Hofkes, M. (2010). Border adjustment for European emissions trading: competitiveness and carbon leakage. Energy policy, 38(4), pp. 1741-1748. https://doi.org/10.1016/j.enpol.2009.11.048. google scholar
  • Kuusi, T., Björklund, M., Kaitila, V, Kokko, K., Lehmus, M., & Mehling, M. ... & Wang, M. (2020, October 29). Carbon border adjustment mechanisms and their economic impact on Finland and the EU. [Web log post]. Retrieved from https://julkaisut.valtioneuvosto.fi/bitstream/ handle/10024/162510/VNTEAS_2020_48.pdf. google scholar
  • Ministry of Economic Development of Russian Federation. (2018). Socio-economic development forecast of Russian Federation to 2036. [Web log post]. Retrieved from https://www.economy. gov.ru/material/directions/makroec/prognozy_socialno_ekonomicheskogo_razvitiya/prognoz_ socialno_ekonomicheskogo_razvitiya_rossiyskoy_federacii_na_period_do_2036_goda.html. google scholar
  • Misch, F., & Wingender, P. (2021, August 6). Revisiting carbon leakage. Working Paper No. 2021/207, IMF. google scholar
  • Pietzcker, R.C., Osorio, S., & Rodrigues, R. (2021). Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector. Applied Energy. No. 293. https://doi.org/10.1016/j.apenergy.2021.116914. google scholar
  • Roshydromet. (2021). National inventory report 1990 - 2019: anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol. google scholar
  • Venmans, F., Ellis, J., & Nachtigall, D. (2019). Carbon pricing and competitiveness: are they at odds? Climate Policy, 20:9, pp. 1070-1091. https://doi.org/10.1080/14693062.2020.1805291. google scholar
  • Kaitila, V., Kuusela, O. P., Kuusi, T., Pohjola, J., & Soimakallio, S. (2022). Revisiting the economic impacts of the EU CBAM on Finland and the EU. [Web log post]. Retrieved from https://www. etla.fi/en/publications/reports/euroopan-komission-ehdottaman-hiilirajamekanismin-vaikutuksia-suomessa-ja-eussa/. google scholar
  • Votinov A., Lazaryan S., Radionov S., Sudakov S. (2021). Impact of EU’s carbon border adjustment mechanism on Russia, HSE EconomicJournal. 25(3), pp. 452-477. https://doi.org/10.17323/1813-8691-2021-25-3-452-477. google scholar
  • Weitzel, M., Hübler, M., & Peterson, S. (2012). Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment. Energy Economics, 34, S198 - S207. https://doi. org/10.1016/j.eneco.2012.08.023. google scholar
  • World Bank. (2022a, July 19). Carbon pricing dashboard. [Web log post]. Retrieved from https:// carbonpricingdashboard.worldbank.org/ google scholar
  • World Bank. (2022b, July 19). World integrated trade solution. [Web log post]. Retrieved from https://wits.worldbank.org/ google scholar
  • Yakovlev I. A., Kabir L. S., Nikulina S. I. (2022). The national strategy for financing the energy transition: assessing opportunities and finding solutions. Financial Journal, vol. 14(5), pp. 9-24. https://doi.org/10.31107/2075-1990-2022-5-9-24. google scholar
  • Zachmann, G., & McWilliams, B. (2020, March 5). A European carbon border tax: much pain, little gain. Bruegel, Policy Contribution. [Web log post]. Retrieved from https://www.bruegel.org/ sites/default/files/wp_attachments/PC-05-2020-050320v2.pdf. google scholar
There are 33 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Research Article
Authors

Sergei Sudakov 0000-0002-8683-4932

Publication Date December 30, 2023
Submission Date December 29, 2022
Published in Issue Year 2023

Cite

APA Sudakov, S. (2023). Effects of the EU’s CBAM on Eurasian Countries. İstanbul İktisat Dergisi, 73(2), 675-696. https://doi.org/10.26650/ISTJECON2023-1226280
AMA Sudakov S. Effects of the EU’s CBAM on Eurasian Countries. İstanbul İktisat Dergisi. December 2023;73(2):675-696. doi:10.26650/ISTJECON2023-1226280
Chicago Sudakov, Sergei. “Effects of the EU’s CBAM on Eurasian Countries”. İstanbul İktisat Dergisi 73, no. 2 (December 2023): 675-96. https://doi.org/10.26650/ISTJECON2023-1226280.
EndNote Sudakov S (December 1, 2023) Effects of the EU’s CBAM on Eurasian Countries. İstanbul İktisat Dergisi 73 2 675–696.
IEEE S. Sudakov, “Effects of the EU’s CBAM on Eurasian Countries”, İstanbul İktisat Dergisi, vol. 73, no. 2, pp. 675–696, 2023, doi: 10.26650/ISTJECON2023-1226280.
ISNAD Sudakov, Sergei. “Effects of the EU’s CBAM on Eurasian Countries”. İstanbul İktisat Dergisi 73/2 (December 2023), 675-696. https://doi.org/10.26650/ISTJECON2023-1226280.
JAMA Sudakov S. Effects of the EU’s CBAM on Eurasian Countries. İstanbul İktisat Dergisi. 2023;73:675–696.
MLA Sudakov, Sergei. “Effects of the EU’s CBAM on Eurasian Countries”. İstanbul İktisat Dergisi, vol. 73, no. 2, 2023, pp. 675-96, doi:10.26650/ISTJECON2023-1226280.
Vancouver Sudakov S. Effects of the EU’s CBAM on Eurasian Countries. İstanbul İktisat Dergisi. 2023;73(2):675-96.