Carbon border adjustment mechanism: a systematic literature review of the latest developments

Zhong, Jiarui; Pei, Jiansuo

doi:10.1080/14693062.2023.2190074

Cited by 16 publications

(9 citation statements)

References 56 publications

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“…Firstly, we suggest that global regulators develop and refine carbon border adjustment mechanisms based on carbon footprint-based taxes on imported products. Such border adjustments might help level the playing field between countries with strong environmental regulations and those with weaker regulations and may be particularly effective at preventing carbon transfers (Zhong and Pei, 2023).…”

Section: Discussionmentioning

confidence: 99%

Carbon management and the global value chain: have carbon emissions been reduced?

Pan,

Li,

et al. 2024

SAMPJ

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Purpose This paper aims to explore the pathways of carbon transfer in 200 US corporations along with the motivations that drive such transfers. The particular focus is on each firm’s embeddedness in the global value chain (GVC) and the influence of environmental law, operational costs and corporate social responsibility (CSR). The insights gleaned bridge a gap in the literature surrounding GVCs and corporate carbon transfer. Design/methodology/approach The methodology comprised a two-step research approach. First, the authors used a two-sided fixed regression to analyse the relationship between each firm’s embeddedness in the GVC and its carbon transfers. The sample consisted of 217 US firms. Next, the authors examined the influence of environmental law, operational costs and CSR on carbon transfers using a quantitative comparison analysis. These results were interpreted through the theoretical frameworks of the GVC and legitimacy theory. Findings The empirical results indicate positive relationships between carbon transfers and GVC embeddedness in terms of both a firm’s position and its degree. From the quantitative comparison, the authors find that the pressure of environmental law and operational costs motivate these transfers through the value chain. Furthermore, CSR does not help to mitigate transfers. Practical implications The findings offer insights for policymakers, industry and academia to understand that, with globalised production and greater value creation, transferring carbon to different parts of the GVC – largely to developing countries – will only become more common. The underdeveloped nature of environmental technology in these countries means that global emissions will likely rise instead of fall, further exacerbating global warming. Transferring carbon is not conducive to a sustainable global economy. Hence, firms should be closely regulated and given economic incentives to reduce emissions, not simply shunt them off to the developing world. Social implications Carbon transfer is a major obstacle to effectively reducing carbon emissions. The responsibilities of carbon transfer via GVCs are difficult to define despite firms being a major consideration in such transfers. Understanding how and why corporations engage in carbon transfers can facilitate global cooperation among communities. This knowledge could pave the way to establishing a global carbon transfer monitoring network aimed at preventing corporate carbon transfer and, instead, encouraging emissions reduction. Originality/value This study extends the literature by investigating carbon transfers and the GVC at the firm level. The authors used two-step research approach including panel data and quantitative comparison analysis to address this important question. The authors are the primary study to explore the motivation and pathways by which firms transfer carbon through the GVC.

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Section: Discussionmentioning

confidence: 99%

Carbon management and the global value chain: have carbon emissions been reduced?

Pan,

Li,

et al. 2024

SAMPJ

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“…The CBAM's effect on Australia's major trading partners like China, could indirectly impact Australia’s exports to these countries. The CBAM could lead to a redistribution of competitiveness among countries and regions, with more pronounced effects in emission-intensive and trade-intensive sectors (Zhong and Pei, 2023). This may have long-term implications for Australia's economic competitiveness, especially as similar initiatives are adopted by other nations.…”

Section: The Carbon Border Adjustment Mechanism’s Impact On Australia...mentioning

confidence: 99%

“…, 2022). This could lead to significant alterations in trade dynamics between these countries and the EU, potentially requiring revisions in bilateral trade agreements to maintain economic stability (Zhong and Pei, 2023).…”

Section: A Swot Analysis Of Australia-china Cooperation In Response T...mentioning

confidence: 99%

“…The EU Carbon Border Adjustment Mechanism (CBAM) designed to minimise the carbon footprint of imports and create an equitable environment for European producers represents a complex policy instrument at the intersection of environmental sustainability and global trade dynamics, warranting a comprehensive analysis of its various aspects and implications. Officially launched on October 1, 2023, the CBAM, colloquially known as a “carbon tariff”, initially targets sectors including cement, iron, steel, aluminium, and electricity, but will expand to other significant products (Zhong and Pei, 2023). This pioneering approach extends EU's internal carbon pricing to the carbon embedded in imported carbon-intensive goods, representing a novel stride in “carbon diplomacy” (Hancock et al.…”

Section: Introductionmentioning

confidence: 99%

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The potential impact of EU’s carbon border adjustment mechanism (CBAM): an Australia-China relationship perspective

Shi,

Laurenceson,

Liu

2024

JCEFTS

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Purpose This paper aims to investigate the multifaced aspects and consequences of the EU Carbon Border Adjustment Mechanism (CBAM) from an Australia-China Relationship perspective. Design/methodology/approach This paper leverages the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to examine both the internal and external factors that affect Australia and China in the context of the CBAM. In addition, we employ the PEST (Political, Economic, Social and Technological) framework to identify effective strategies for Australia-China cooperation following the implementation of the CBAM. Findings Our analysis reveals numerous mutual interests and opportunities for bilateral collaboration, despite challenges and threats, positioning the CBAM as a potentially significant catalyst for joint initiatives. Practical implications This paper proposes 10 potential areas for Australia and China cooperation from the political economic social and technological PEST dimensions. Originality/value This paper makes a pioneering attempt to explore potential strategies, both individually, and together, that Australia and China can adopt to manage the impact and consequence of CBAM.

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“…While global alliance is gaining momentum in achieving the target of carbon neutrality across nations by 2050 in accordance with the Paris Agreement, European Union's (EU) unilateral climate regulation 1 -Carbon Border Adjustment Mechanism (CBAM) is highly contentious. While aiming to reduce carbon leakage and simultaneously ensure competitiveness, evaluating the welfare implications of CBAM across economies is critical [1]. As the implementation phase of CBAM will begin in October 2026; international policymakers, academicians, and business houses are struggling to apprehend the quantitative impact of CBAM on their respective domestic economy and the overall trade pattern across the globe.…”

Section: Introductionmentioning

confidence: 99%

Impact of the European Union's Carbon Border Adjustment Mechanism - Evidence from India and Other Selected Trading Partners of EU

Majumder,

Mathur,

Pohit

2024

GLCE

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The European Union (EU) recently introduced the Carbon Border Adjustment Mechanism (CBAM) with the intention to impose a pricing mechanism on carbon emissions, originating during the production process of emission-intensive products, imported by EU from its non-EU trading partners. However, CBAM is facing a lot of criticism ̶ as an unfair, protectionist measure that threatens the principles of multilateral trading system and has a disproportionately biased impact on the overall welfare of the low-income developing countries. In this context, the paper empirically examines the impact of the European Union’s Carbon Border Adjustment Mechanism on its trading partners by using the CGE GTAP-E model. The impact has been assessed across three pathways – export sales of the trading partners, the emission intensity of the products, and the overall impact on the welfare of the European Union’s (EU’s) trading partners using the GTAP 11 database. The impact varies across countries and sectors. The model estimates indicate that due to the imposition of CBAM, countries with existing domestic carbon pricing mechanism experience marginal increase in welfare with the UK being an exception. Contrastingly, countries with no carbon pricing mechanism will experience a decrease in overall welfare. Countries with a higher share of the EU in their total export basket are affected in terms of their export sales. India’s cement sector export is affected the most due to the imposition of CBAM. However, India’s total amount of exports of cement to the EU’s market is negligible. India’s export of iron and steel to the EU constitutes a larger share but the impact of CBAM is found to be negligible on the same.

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Carbon border adjustment mechanism: a systematic literature review of the latest developments

Cited by 16 publications

References 56 publications

Carbon management and the global value chain: have carbon emissions been reduced?

Carbon management and the global value chain: have carbon emissions been reduced?

The potential impact of EU’s carbon border adjustment mechanism (CBAM): an Australia-China relationship perspective

Impact of the European Union's Carbon Border Adjustment Mechanism - Evidence from India and Other Selected Trading Partners of EU

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