GTAP Resources: Resource Display
| GTAP Resource #7864 |
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"A model-based assessment of Carbon Border Adjustment Mechanisms across major economies" Authors: Fragkiadakis, Dimitris, Ioannis Charalampidis, Eleni Gkampoura and Zoi Vrontisi Abstract This study investigates the macroeconomic and trade implications of the European Union's Carbon Border Adjustment Mechanism (CBAM) and of a potential expansion by major economies using the GEM-E3 general equilibrium model. By formulating three scenarios of increasing CBAM adoption, we assess the economic implications on GDP, trade patterns, and sectoral performance. The results confirm that CBAM has only limited economy wide and global macroeconomic implications, with total GDP effects remaining small across all scenarios, with GDP changes ranging from -0.02% to -0.11%.Global greenhouse gas emissions and aggregate trade volumes are likewise only marginally affected, even under wider international adoption of CBAM. Country level impacts are determined by fossil fuel dependance and emission intensity in the production of CBAM-related sectors. Countries implementing CBAM, notably the EU, experience a reallocation of competitiveness: while CBAM covered sectors are partially insulated from carbon leakage, the economy wide outcome is shaped by indirect effects on downstream activities. Countries with cleaner production profiles, such as Japan and South Korea, record higher competitiveness due to lower export costs and experience GDP gains. A central finding is that downstream and upstream sectors not directly covered by CBAM account for a large share of the aggregate economic adjustment, emphasizing the need for coordinated policy design and transitional support for vulnerable economies. |
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- Climate change policy - Trade and the environment |
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Public Access  Paper (1.3 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/30/2026 12:56:16 PM
