The EU Carbon Border Adjustment Mechanism will exacerbate the economic-carbon inequality in the plastic trade

Abstract

The EU Carbon Border Adjustment Mechanism (CBAM) is regarded as the world's first carbon tariff regulation. Its consequential impacts on the trades of individual countries/regions at different development stages are crucial for climate justice while remaining unclear. By combining Multi-regional Input-output analysis and scenario analysis, this study analyzed the economic-carbon inequality in national/regional plastic exports and simulated CBAM's short-term impacts on plastic trade inequality under different scenarios. Our analysis shows that the maximum values of total carbon tariffs for all countries/regions levied on plastic exports to the EU will be 497.8, 859.1, and 1564.2 million euros under scenarios covering Scope 1, Scope 1&2, and Scope 1&2&3 emissions, respectively. The corresponding proportions of CBAM costs to national/regional plastic export volumes to the EU will be 0.6%, 1.0%, and 1.8% on average, respectively. China and the rest of Asia and the Pacific will burden the most CBAM costs in all cases, and Russia will be the country most affected. CBAM will exacerbate the economic-carbon inequality in the plastic trade by reducing the trade profits of developing economies with higher ratios than those of developed economies. Our analysis calls for practical initiatives to induce technological advances toward lower carbon technologies, increase trade diversification, exploit the domestic market's potential, and implement domestic carbon pricing mechanisms to alleviate the negative impact of CBAM.