It is our pleasure to invite you to our latest  EU Strategic Toolbox Talk:

The Carbon Border Adjustment Mechanism (CBAM)

Balancing EU Climate and Trade Policy

An online discussion with:

Madelaine Tuininga, Head of Unit for Multilateral Trade and Sustainable Development Policy, Green Deal, Conflict Minerals – DG Trade

Sonja Peterson, Senior Researcher „Global Commons and Climate Policy”, Kiel Institute for the World Economy and Honorary Professor for Climate and Energy Policy at the Faculty of Business, Economics and Social Science, Kiel University

Thieß Petersen, Senior Advisor, Bertelsmann Stiftung

Moderator:  Peter Walkenhorst, Senior Project Manager, Bertelsmann Stiftung

Thursday, April 27, 2023

5:15 – 6:15 pm CET/11:15 – 12:15 pm EST 

Register Here 

This event continues our online event series EU Strategic Toolbox Talks. In our Toolbox Talks, we are focusing on existing and upcoming EU instruments aimed at managing critical dependencies and strengthening the EU’s sovereignty and external economic governance. These instruments form an important basis for fostering the EU’s capability to act in a global environment increasingly shaped by geopolitical tensions and systemic rivalries.

The EU’s Carbon Border Adjustment Mechanism (CBAM) is a new tool to avoid carbon leakage. It aims to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. It will enter into force in its transitional phase on October 1st, 2023.

The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. The gradual introduction of the CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonization of EU industry.

The CBAM is a key element of the EU’s Green Deal climate strategy. However, it also has wider implications for EU external trade. Imports from non-EU countries that contain emissions will be subject to a CO2 tax equal to the EU’s carbon price. This will further increase the price of emission-containing products in the EU.

Against this background, we want to discuss the objectives and challenges of the CBAM, as well as its implications for EU trade policy, especially with its neighborhood, the U.S. and China. So far, it is unclear whether the EU will provide supportive measures to mitigate the economic disadvantages for the less developed economies in the European neighborhood. Both China and the U.S. have also criticized the planned introduction of CBAM.

In this discussion, we will address the following questions and topics:

  • What are the EU’s current plans regarding the design of CBAM and what are the key challenges?
  • What are the implications of higher EU carbon prices in combination with CBAM for European neighborhood countries? How can the EU mitigate the negative economic impacts of its climate policy and CBAM, such as increased export costs and GDP losses for its neighboring states?
  • How are the U.S. and China likely to react to the introduction of CBAM? What effects on EU foreign trade can be expected?

We are looking forward to your participation! 

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