In this policy brief, the EWI discusses the potential implications of a European carbon border adjustment mechanism (CBAM). The analysis shows several factors determining to what extent exporters to the European Union will be affected by the introduction of a CBAM. A European carbon border adjustment will affect global trade flows. According to the European Commission’s current legislative proposal, the carbon border adjustment likely does not yet fully achieve fair competition conditions in the European market and prevent “carbon leakage”.
