Monetization of emissions reductions in the EU in the context of carbon border adjustment mechanism

Abstract

It is believed that the significant reduction of greenhouse gas (GHG) emissions can be achieved by establishing a trading system of this specific product. In fact, the reduction of emissions is mainly due to decrease of production volumes and technological reasons, rather than organizational, institutional and fiscal factors. As shown in the article on the basis of correlation analysis, the reduction of GHG emissions in the steel and aluminum industries of the EU over the past two decades by an average of 95% is explained by a reduction in output in tons. The remaining 5% is related to technology improvements. In general, the efficiency of the EU Emissions Trading System for these industries is close to zero and comparable to a statistical error. At the same time, it is impossible to deny a certain effect of institutional factors, such as the climate agenda and public opinion. It is revealed that the Carbon Border Adjustment Mechanism (CBAM) is necessary for the EU, first of all, as an additional source of revenue to the EU budget, and as a tool to strengthen its leadership role in the world climate policy and global geopolitical and information spaces.