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GTAP Resource #6990

"Carbon Border Adjustment Mechanism (CBAM) Explorer"
by Chepeliev, Maksym, Erwin Corong and Maryla Maliszewska

In December 2022, the EU reached a provisional agreement on the world’s first Carbon Border Adjustment Mechanism (CBAM), which aims to combat climate change and prevent carbon leakage. The CBAM implementation will start by covering direct emissions from iron and steel, aluminum, cement, fertilizers, and electricity, with a further extension of commodity coverage and emissions’ scope over time.
While providing valuable insights, earlier studies have not adequately considered several essential points. First, the future architecture of the CBAM is expected to change over time. The latter would include changing commodity and emissions’ scope coverage. Second, the level of carbon prices in the EU that would be observed is subject to change depending on the stringency of the mitigation efforts. Third, as most studies utilize the standard GTAP data base for assessing the CBAM impacts, corresponding analyses suffer from aggregation bias. A number of commodities that are expected to be covered by the CBAM, such as cement, aluminum or fertilizers, are aggregated within broad GTAP sectors (non-metallic minerals, non-ferrous metals and chemicals). Finally, most of the earlier studies have a specific geographical focus.
We address same of the limitations of the earlier studies. Our assessment will start from version 11 of the GTAP Data Base, which includes a number of methodological improvements relevant to the assessment of the CBAM. The latter consists of a revised treatment of the fossil fuel combustion CO2 emissions and a refined representation of the bilateral energy trade flows. We will split such commodities like steel, cement, aluminum and plastic out of the aggregated GTAP sectors. We will then develop sectoral and regional aggregation retaining a high level of spatial resolution with a particular focus on developing regions keeping at least 60 individual countries. We further update the database to the 2030 reference year via a one-step run of the GTAP-E-Power model.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Created: Maliszewska, M. (4/15/2023)
Updated: Maliszewska, M. (4/15/2023)
Visits: 872
- Climate change policy
- Trade and the environment
- Economic growth
- Supply chains

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