Reforming carbon border adjustment mechanisms: European industry perspectives on a path forward

Thibault Deletombe, Karsten Neuhoff, Misato Sato, Sini Matikainen, Fernanda Ballesteros, Nicolas Berghmans, Balázs Felsmann, Gábor Horváth, Neila Khelifi, Johan Rootzen, Aleksander Śniegock, Aneta Stefańczyk and Lars Zetterberg

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Europe’s climate ambitions are increasingly shaped by a fragmenting economic and geopolitical environment. Against this backdrop, the shortcomings of the EU’s Carbon Border Adjustment Mechanism (CBAM) are becoming ever more apparent. The current design of the mechanism creates circumvention risks, lacks export coverage and is limited to upstream producers. These flaws delay the creation of a level playing field for export-oriented industries, posing significant challenges related to the leakage of carbon emissions and industrial production. This policy brief explores several options for redesigning the CBAM, with a view to the EU’s upcoming market reform of the Emissions Trading System (ETS) in 2026 and the UK’s introduction of its own CBAM in 2027. The authors discuss their findings from a series of interviews on the CBAM conducted by DIW Berlin, CETEx and their research partners.

JEL-codes: J01 N0 R14 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2026-06
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