Carbon Border Adjustment Mechanism: New Context for EU-Russia Relations

Abstract

The article examines the introduction of the EU carbon border adjustment mechanism (CBAM) as part of the EU economy decarbonization. The implementation of this initiative poses certain risks for the EU trading partners. Moreover, this issue is extremely important for the entire global trading system. The purpose of the study is to assess the real threats of the mechanism for Russian companies and identify opportunities for successful adaptation to the new green realities. The theoretical approaches and prerequisites for the CBAM introduction are analyzed, its systemic effects for companies around the world are shown. The channels and possible scale of this measure’s impact on Russian exporters are considered. The authors analyze the main possible response scenarios for Russia. The most promising scenarios could be: a) intensification of the carbon-free energy and increasing the energy efficiency of production processes, 2) development of an alternative compensatory mechanism, 3) integration into the regional emissions trading system. A possible challenge of the CBAM introduction in the WTO may be ineffective; cooperation with countries outside the “green agenda” – counterproductive. It is concluded that there are opportunities for Russian companies to strengthen their competitiveness due to CBAM requirements. However, there is a lack of expertise in a number of areas and levels, which can hinder the implementation of these opportunities.