Analysis of the Potential Impact of the EU Carbon Border Adjustment Mechanism on China

Abstract

Excessive carbon dioxide emissions are one of the major causes of global warming. To effectively respond to global climate change, all countries are making efforts and changes in this regard. As one of the largest carbon markets in the world, the European Union (EU), to better respond to the Paris Agreement, introduced the European Green Deal and the EU Carbon Border Adjustment Mechanism (CBAM). The mechanism requires that high-carbon products imported into or exported from the EU pay a corresponding amount of tax or refund the corresponding carbon emission allowances. The implementation of the EU Carbon Border Adjustment Mechanism (CBAM), which is essentially a carbon tariff, has also had a significant impact on the Chinese market. The more carbon-intensive steel industry has been the first to be hit, affecting the competitiveness of the industry's exports in the EU to a certain extent, while also increasing compliance costs for the development of other related industries. Chinese enterprises should strengthen innovation and research, and actively introduce low-carbon technologies. At the same time, China should continue to improve its own voice and accelerate the construction of the national carbon market.