How will CBAM affect the decarbonisation of steel industry in China? A system dynamics approach

Lu-Tao Zhao, Zhe-Yi Chen, Ya-Xuan Duan and Rui-Xiang Qiu

International Journal of Production Research, 2024, vol. 62, issue 18, 6859-6880

Abstract: EU's Carbon Border Adjustment Mechanism (CBAM) has been promulgated. The steel industry is included in CBAM, which will undoubtedly affect the export trade of China's steel manufacturers to the EU. It is necessary to analyse the impact of CBAM on China’s steel industry quantitatively. By establishing a system dynamics model that can simulate the operation mechanism of the steel supply chain in China, we have clarified the impacts of CBAM on the China's steel export and carbon reduction. Moreover, we have reasonably set up scenarios that represent the possible decarbonisation paths of China's steel industry and evaluated the implementation effect of each policy in these scenarios. The analysis shows that CBAM will lead to a decrease of 32% in export volume and a loss of 58% in export profits for China's steel exporters. The environmental benefits of CBAM are limited. Due to the low trade exposure, CBAM is unable to promote a large-scale carbon reduction in the China’s steel industry. Although CBAM will bring great pressure to steel exporters, a comprehensive policy of adopting more emission reduction measures can greatly improve the carbon reduction efficiency, effectively reduce the negative impact of CBAM, and maintain the stability of steel exports.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2023.2285397 (text/html)
Access to full text is restricted to subscribers.

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:taf:tprsxx:v:62:y:2024:i:18:p:6859-6880

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2023.2285397

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().