Proactive prevention of carbon leakage? The EU Carbon Border Adjustment Mechanism

In Tim Rayner, Kacper Szulecki, Jordan Andrew and Sebastian Oberthür (eds), Handbook on European Union Climate Change Policy and Politics. Edward Elgar Publishing, 2023, Chapter 16, pp. 231-246.

For a number of years, the main EU policy response to concerns about carbon leakage. i.e. the relocation of production to jurisdictions with more lax climate policies, was to maintain a large proportion of free allowances under the EU Emissions Trading System. But another possible response has taken the form of a carbon border adjustment mechanism (CBAM). This chapter explores why the CBAM option gained such prominence from 2019 in particular, culminating in a formal proposal tabled in mid-2021. It identifies France as a consistent advocate of the idea. Furthermore, the appointment of the von der Leyen-led Commission in 2019 and the advent of the European Green Deal constituted a central turning point, although von der Leyen’s support of the CBAM idea appears to a large degree a response to European Parliament pressure. The chapter also discusses central dynamics in the decision-making process and prospects ahead, which are rendered more uncertain by the Russian invasion of Ukraine in May 2022.



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