A Clean Tariff? Effects and Challenges of EU CBAM

Ville Kaitila, Tero Kuusi, Mika Pajarinen and Maria Wang

No 162, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract This study examines the impacts of the European Union’s Carbon Border Adjustment Mechanism (CBAM) on corporate costs, adaptation strategies, and international trade. CBAM aims to supplement the EU’s emissions trading system and mitigate the risk of carbon leakage. The report evaluates the effects of CBAM’s initial phase and anticipates its future significance for Finnish enterprises. Through the use of gravity modeling, the study distinguishes the effects of CBAM from other trade-influencing factors. Furthermore, companies were surveyed regarding the administrative expenses incurred by CBAM and its influence on value chains. Findings indicate that CBAM decreases imports of covered products from non-EU countries and promotes intra-EU procurement. The system’s complexity and associated costs are deemed particularly burdensome for small businesses.

Keywords: Carbon leakage; Carbon border adjustment mechanism; Gravity model; Survey; Administrative cost (search for similar items in EconPapers)
JEL-codes: Q38 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2025-04-15
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