CBAM: Damaging to Climate Protection and EU Export Industries (cepStudy)


Imports from third countries with low climate protection standards are jeopardising the competitiveness of companies in the EU. The Commission therefore wants to introduce a Carbon Border Adjustment Mechanism (CBAM) that would make imports from countries with lax standards, such as Russia, more expensive. The amount of the levy is to correspond to the price of EU emissions trading ("notional ETS").


"The Commission should reconsider the CBAM," demands cep expert Götz Reichert. The lawyer has written a 60-page study with his colleagues, economist Martin Menner from Freiburg and lawyer Marion Jousseaume from Paris. "A WTO-compliant design of the notional ETS is conceivable in principle. Ultimately, however, only a WTO ruling would bring certainty," Jousseaume explains. "The EU is thus entering uncharted territory of WTO law, where pitfalls lurk. The devil is in the details," adds Reichert. "In addition, international trade conflicts are looming."

The authors criticise that the Commission does not plan a carbon border adjustment in favour of EU exporters as compensation for the free allocation applied up to now. The consequence: European companies would only be protected from cheap competition in the EU internal market, but not on the world market. "They suffer considerable competitive disadvantages as a result," says Menner. If they move out of the EU to countries with more lax climate protection regulations, there is a risk of both a loss of added value and jobs as well as an increase in global carbon emissions.

According to Menner, as long as global emissions trading is not established, the EU should focus its efforts on ensuring that at least the most important industrialised and emerging countries agree on an emissions trading system. "Only then can free allocations be phased-out, as remaining competitive disadvantages of European companies will be more manageable."