Modeling the Impact of Carbon Border Policies on Emissions, Global Value Chains, and Welfare

Joseph Francois and Neil Foster-McGregor
Additional contact information
Joseph Francois: University of Bern
Neil Foster-McGregor: Asian Development Bank

No 792, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper employs a computational general equilibrium model to examine the potential impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM). The paper considers the impact of extending CBAM to other economies, examining whether approaches that require increased coordination of carbon pricing over a greater number of jurisdictions can increase the impact of CBAM. Results suggest that while an expanded scheme of carbon prices and border carbon taxes can reduce emissions, underlying global economic growth trends are more than enough to quickly undo the highest emissions reductions modelled here. As such, sustained technical innovation and major changes in the underlying structure of energy systems will be required to meet Intergovernmental Panel on Climate Change (IPCC) targets. The results also reinforce another message of recent IPCC reports, namely that in some cases the potential impacts of mitigation actions through domestic and trade-related carbon taxes may fall disproportionately on poorer regions.

Keywords: computable general equilibrium; carbon pricing; border carbon adjustments (search for similar items in EconPapers)
JEL-codes: C68 Q56 (search for similar items in EconPapers)
Pages: 31
Date: 2025-07-16
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.adb.org/publications/modeling-impact-carbon-border-policies Full Text

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:021407

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().