Climate Change Mitigation and Policy Spillovers in the EU’s Immediate Neighborhood

Serhan Cevik, Ilahi Nadeem, Krogulski Krzysztof, Li Grace, Mohona Sabiha and Zhao Yueshu
Additional contact information
Ilahi Nadeem: 8385 International Monetary Fund , Washington, DC, USA
Krogulski Krzysztof: 8385 International Monetary Fund , Washington, DC, USA
Li Grace: 8385 International Monetary Fund , Washington, DC, USA
Mohona Sabiha: 8385 International Monetary Fund , Washington, DC, USA
Zhao Yueshu: 8385 International Monetary Fund , Washington, DC, USA

Review of Economics, 2025, vol. 76, issue 1, 37-79

Abstract: The European Union (EU) neighborhood countries (EUN) have lagged the EU on emissions mitigation, due largely to coal-heavy power generation and industrial sectors. EUN has also trailed EU countries in emissions mitigation policies since 2000, with little use of market-based instruments, and they still have substantial fossil fuel subsidies. Increasingly stringent EU mitigation policies are associated with lower emissions in EUN. Overall, output effects of the Carbon Border Adjustment Mechanism (CBAM), in its current form, would be limited, though exports and emissions-intensive industries could be heavily impacted. A unilaterally adopted economywide carbon tax of US$75 per ton would significantly lower emissions by 2030, with minimal consequences for output or household welfare, though a safety net for the affected workers may be necessary. To become competitive today by attracting green FDI and technology, overcoming infrastructure constraints and integrating into EU’s supply chains, EUN countries would be well served to front load decarbonization, rather than postpone it for later.

Keywords: climate change; climate change mitigation; carbon emissions; carbon tax; Europe; European Union (search for similar items in EconPapers)
JEL-codes: H20 Q43 Q47 Q48 Q54 Q55 Q58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/roe-2024-0023 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Climate Change Mitigation and Policy Spillovers in the EU’s Immediate Neighborhood (2023)
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:lus:reveco:v:76:y:2025:i:1:p:37-79:n:1002

Ordering information: This journal article can be ordered from
https://www.degruyte ... journal/key/roe/html

DOI: 10.1515/roe-2024-0023

Access Statistics for this article

Review of Economics is currently edited by Michael Berlemann

More articles in Review of Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().