Key Points and Implications of the EU Carbon Border Adjustment Mechanism Legislative Proposal

Soyoung Lim () and Jooyoung Yang ()
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Soyoung Lim: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr
Jooyoung Yang: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr

No 21/16, i-KIET Issues and Analysis from Korea Institute for Industrial Economics and Trade

Abstract: On July 14, 2021, the European Commission announced its Fit for 55 package to reach the EU’s climate target of cutting emissions by 55 percent by 2030. A Carbon Border Adjustment Mechanism (CBAM) legislative proposal was introduced as part of this package. The proposal describes the mechanism and scope of CBAM, emissions calculation methods, and exclusions. It follows the method by which Emissions Trading Schemes (ETS) operate for EU importers. During a transitional phase, imports must be accompanied by a mandatory reporting of carbon data. Starting in 2026, following the conclusion of a transitional period, importers will be required to buy certificates with carbon prices determined by the EU ETS. Through an examination of Korea’s domestic ETS and an identification of the country’s strengths, this analytical brief explores ways to minimize the potentially negative impacts of ETS on Korean industries.

Keywords: CBAM; carbon border adjustment mechanism; carbon tax; carbon pricing; emissions trading scheme; ETS; climate change; greenhouse gas; GHG; environmental policy; carbon policy; EU; Korea; industrial policy (search for similar items in EconPapers)
JEL-codes: F02 F13 F18 F23 F51 F53 F64 H12 H87 K32 L52 Q01 Q27 Q28 Q37 Q38 Q52 Q54 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2021-07-23
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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