Carbon Leakage Research Articles

Carbon leakage and low-carbon performance: Heterogeneity of responsibility perspectives

As one of the research hotspots in the field of environmental economy, many scholars focus on evaluating low-carbon performance of multiple regions, but almost all of them ignore the impact of carbon leakage. To fill the gap, this paper proposed a new evaluation framework to incorporate carbon leakage by combining the multi-regional input-output table (MRIO), the non-radial directional distance function (NDDF) and the meta-frontier approach. Following the framework, we analyze the performance of 42 countries under three typical carbon responsibility principles, including their low-carbon efficiency and rankings, technology gaps, and emission reduction potential respectively. The main findings are as follows: 1) The carbon leakage and transfer significantly influenced the country's low-carbon performance, mainly by improving the performance level, widening the technology gap, and overestimating the reduction potential, but not affecting the overall ranking structure. 2) Different evaluation method based on heterogenous perspectives can provide complementary information about countries' low-carbon performance. 3) The consumer and equally shared perspectives should gain more attention on the pathway to a cleaner world economy. Synthesizing the results under different perspectives, this paper proposes policy recommendations for different types of countries to promote local low-carbon development.

EU’s Carbon Border Adjustment Mechanism: Will It Achieve Its Objective(s)?

The European Commission’s proposed carbon border adjustment mechanism (CBAM) aims to prevent the risk of carbon leakage, but it would levy imports even when there is no risk of carbon leakage, which may in turn increase greenhouse gas (GHG) emissions. The proposed CBAM also appears to cite the intermediate objective of ensuring a ‘level playing field’ for carbon pricing, but it is difficult to see the rationale for retroactively equalizing only the carbon price while ignoring the costs paid by producers to support other policies aimed at curbing nationwide GHG emissions and the costs of reducing the emissions from their own products. These issues essentially stem from the CBAM’s inherent and fundamental constraints in the institutional design that charges for emissions from the production process outside the EU’s jurisdiction and cannot be remedied by superficially tweaking the associated mechanism. The CBAM could be justified under Article XX(g) as a measure ‘relating to the conservation of’ an atmosphere with low GHG density without scrutinizing these issues. However, it is questionable to interpret Article XX(g) as authorizing inefficient resource conservation through unilateral measures, despite the exporting country potentially being able to conserve resources more efficiently. carbon border adjustment mechanism (CBAM), carbon leakage, level playing field, European Union, GATT, border tax adjustment

Risk of Carbon Leakage and Border Carbon Adjustments under the Korean Emissions Trading Scheme

Purpose – This paper examines South Korea’s potential status as a carbon leakage country, and the level of risk posed by the Korean emissions trading scheme (ETS) for Korean industries. The economic effects of border carbon adjustments (BCAs) to protect energy-intensive Korean industries in the process of achieving the carbon reduction target by 2030 through the Korean ETS are also analyzed. Design/methodology – First, using the Korean Input–Output (IO) table, this paper calculates the balance of emissions embodied in trade (BEET) and the pollution terms of trade (PTT) to determine Korean industries’ carbon leakage status. Analyses of the risk level posed by carbon reduction policy implementation in international trade are conducted for some sectors by applying the EU criteria. Second, using a computable general equilibrium (CGE) model, three BCA scenarios, exemption regulations (EXE), reimbursement (REB), and tariff reduction (TAR) to protect the energy-intensive industries under the Korean ETS are addressed. Compared to the baseline scenario of achieving carbon reduction targets by 2030, the effects of BCAs on welfare, carbon leakage, outputs, and trading are analyzed. Findings – As Korea’s industrial structure has been transitioning from a carbon importing to a carbon leaking country. The results indicate that some industrial sectors could face the risk of losing international competitiveness due to the Korean ETS. South Korea’s industries are basically exposed to risk of carbon leakage because most industries have a trade intensity higher than 30%. This could be interpreted as disproving vulnerability to carbon leakage. Although the petroleum and coal sector is not in carbon leakage, according to BEET and PTT, the Korean ETS exposes this sector to a high risk of carbon leakage. Non-metallic minerals and iron and steel sectors are also exposed to a high risk of carbon leakage due to the increased burden of carbon reduction costs embodied in the Korean ETS, despite relatively low levels of trade intensity. BCAs are demonstrated to have an influential role in protecting energy-intensive industries while achieving the carbon reduction target by 2030. The EXE scenario has the greatest impact on mitigation of welfare losses and carbon leakage, and the TAF scenario causes a disturbance in the international trade market because of the pricing adjustment system. In reality, the EXE scenario, which implies completely exempting energy-intensive industries, could be difficult to implement due to various practical constraints, such as equity and reduction targets and other industries; therefore, the REB scenario presents the most realistic approach and appears to have an effect that could compensate for the burden of economic activities and emissions regulations in these industries. Originality/value – This paper confirms the vulnerability of the Korean industrial the risk of carbon leakage, demonstrating that some industrial sectors could be exposed to losing international competitiveness by implementing carbon reduction policies such as the Korean ETS. The contribution of this paper is the identification of proposed approaches to protect Korean industries in the process of achieving the 2030 reduction target by analyzing the effects of BCA scenarios using a CGE model.

ANALYSIS OF THE CARBON ALLOWANCE ALLOCATION AND SECTORAL COVERAGE IN THE CARBON MARKET UNDER THE NEW CLIMATE AMBITION: A CASE STUDY IN CHINA

Reasonable allocation of carbon allowances and determination of coverage in the carbon market are essential to the realization of the emissions reduction goal. Using China as an example, we propose a multi-criteria allocation scheme based on the principle of equity, efficiency and feasibility, considering carbon abatement costs and carbon leakage risks. An improved zero-sum gains-data envelopment analysis model in accordance with China’s new carbon intensity target in climate ambition is used for allowance allocation. Subsequently, the sectoral coverage choice of the carbon market is proposed. We obtain an optimal reallocation scheme after five iterations. The results show that the allocation method in this study can better promote the carbon market to reduce emissions at a lower cost while preventing carbon leakage to a certain extent. Based on the contribution to the overall emission reduction, the emission reduction costs and carbon leakage risks, we further classify the sectors into three categories. With China as an example, these findings lay a scientific basis for China to achieve its climate ambition through the carbon market, and also have global implications in regard to developing a more scientific allocation scheme, especially for carbon markets in emerging and developing countries.

Design and Fabrication of Electric Forklift

Abstract: In today life there is wide of forklifts variety of forklifts from the large heavy loadings trucks to the one that works among narrow aisles forklifts have becomes one of basics transportation tools we use in our lives with all the forklifts in existence we find that there are some improvement that can be to bring forklifts to the better performance. We describe forklift powered by an electric motor instead of the IC engine using rechargeable batteries the main objective of this project is to design electrically powered forklift for material handling in industrial warehouses and workshops. Nowadays in industries, the forklift operates on an IC engine for transportation and hydraulic system for lifting and lowering of materials. Due to this mode of operation, there are many adverse environmental impacts such as emission of carbon dioxide and leakage of hydraulic fluid. Thus, this project aim to making the electric system into a forklift to make it electrically powered which lift to 1 ton kg and elevate up to 8 feet. Keyword: Forklift, Heavy Loads, Transportation, I.C engine, Industrial Warehouse, Environment, Electrically Powered.

Indirect cost compensation under the EU ETS: A firm-level analysis

Decarbonisation implies conversion to electrification with a subsequent increase in electricity consumption. The EU Emission Trading System (EU ETS) compensates firms for the higher electricity costs. We exploit sectoral and country differences in regulation and a unique dataset on beneficiaries to evaluate the impact of EU ETS indirect cost compensation on the performance of aided firms. Receiving compensation for indirect costs does not have a statistically significant impact on labour productivity. Conversely, there is evidence of a negative performance in terms of turnover, value of total assets and employment of beneficiaries. Results suggest that the amounts transferred to firms might not fully compensate for the higher cost of energy in aided countries. However, the negative effects fade in sectors more exposed to carbon leakage risk. As far as aid intensity is concerned, estimates imply that higher compensation amounts improve performance.

On the role of forests and the forest sector for climate change mitigation in Sweden

AbstractWe analyse the short‐ and long‐term consequences for atmospheric greenhouse gas (GHG) concentrations of forest management strategies and forest product uses in Sweden by comparing the modelled consequences of forest resource use vs. increased conservation at different levels of GHG savings from carbon sequestration and product substitution with bioenergy and other forest products. Increased forest set‐asides for conservation resulted in larger GHG reductions only in the short term and only when substitution effects were low. In all other cases, forest use was more beneficial. In all scenarios, annual carbon dioxide (CO2) sequestration rates declined in conservation forests as they mature, eventually approaching a steady state. Forest set‐asides are thus associated with increasing opportunity costs corresponding to foregone wood production and associated mitigation losses. Substitution and sequestration rates under all other forest management strategies rise, providing support for sustained harvest and cumulative mitigation gains. The impact of increased fertilization was everywhere beneficial to the climate and surpassed the mitigation potential of the other scenarios. Climate change can have large—positive or negative—influence on outcomes. Despite uncertainties, the results indicate potentially large benefits from forest use for wood production. These benefits, however, are not clearly linked with forestry in UNFCCC reporting, and the European Union's Land Use, Land‐Use Change and Forestry carbon accounting, framework may even prevent their full realization. These reporting and accounting frameworks may further have the consequence of encouraging land set‐asides and reduced forest use at the expense of future biomass production. Further, carbon leakage and resulting biodiversity impacts due to increased use of more GHG‐intensive products, including imported products associated with deforestation and land degradation, are inadequately assessed. Considerable opportunity to better mobilize the climate change mitigation potential of Swedish forests therefore remains.

The pollution haven effect and investment leakage: The case of the EU-ETS

Are polluting firms more likely to invest in environmentally lax countries when confronted with increasingly stringent unilateral environmental policies at home? To answer this question, we explore the relationship between carbon inefficiency, regulatory pressure and the foreign direct investment (FDI) projects of multinational enterprises (MNEs) operating under the European Union Emission Trading Scheme (EU-ETS) during its third phase (2013–2020). Contrary to prior research on its initial and more lenient phases, we provide novel evidence on the existence of a pollution haven effect which enables both investment leakage as well as carbon leakage outside the EU-ETS’s jurisdiction. These results highlight the dangers of implementing a stringent unilateral climate policy from both an economic and an environmental perspective.

Structural relationships of a firm's green strategies for environmental performance: The roles of green supply chain management and green marketing innovation

Global climate sanctions are expected to force supply chain affiliates to reduce greenhouse gas and face trade distortions caused by carbon leakage. In this regard, this study examines how internal green activities such as green managerial innovation, green supply chain management, and green innovation facilitate firms to achieve environmental performance. Also, we endeavor to unveil the role of intellectual property rights and incorporate the mediating role of green supply chain management and the moderating role of green marketing innovation. Using the structural equation model technique, we examined hypotheses with 452 South Korean firms sampled through a web-based survey. Our results validated the direct effect of green managerial innovation and intellectual property right on green supply chain management, green supply chain management and intellectual property right on green innovation, and green innovation on environmental performance. In addition, we confirmed the significant mediating role of green supply chain management between intellectual property rights and green innovation and the moderating role of green marketing innovation between green innovation and environmental performance. These findings contribute to the literature on clean production and environmental performance by uncovering a firm's internal green strategies for resource utilization and identifying the contingent roles of green marketing innovation.

The GATT-Legality of Border Adjustments for Carbon Taxes and the Cost of Emissions Permits: A Riddle, Wrapped in a Mystery, Inside an Enigma

Much of this analysis was initially presented at a conference on “U.S. Energy Tax Policy” sponsored by the American Tax Policy Institute held in Washington, D.C., Oct. 15-16, 2009.“Russia . . . is a riddle, wrapped in a mystery, inside an enigma.” – Winston Churchill“The application of BTAs to energy taxes under the GATT/WTO rules is clouded with uncertainty.” – OECDWith the notable exception of the United States (and, until recently, Australia), developed nations and many nations in transition from socialism made commitments under the Kyoto Protocol to reduce emissions of CO2, the most important greenhouse gas thought to be responsible for global warming. By comparison, the Protocol excused developing countries from the need to cap emissions. Both countries making commitments to reduce emissions and those that have not made commitments, but are considering doing so, are concerned that policies adopted to meet targets for emissions reductions will place their carbon-intensive industries at a competitive disadvantage relative to those in countries not making commitments and induce carbon leakage to those nations which they see as “free riders” in the global effort to reduce greenhouse gas emissions. On the other hand, developing countries resist carbon pricing, both because they do not want to hamper economic development and because they believe that primary responsibility for reducing emissions should lie with the developed countries that emitted virtually all the greenhouse gases now in the environment.2 Moreover, the statement in the 1992 Rio Declaration on Environment and Development that “States have common but differentiated responsibilities” underlies the UN Framework Convention on Climate Change (UNFCCC) and thus the Kyoto Protocol.

Policy Forum: Trade Policy Pain for Marginal Climate Gain? The Complex Case for Border Carbon Adjustments in Canada

Spurred by a 2021 commitment by the European Union to adopt a carbon border adjustment mechanism to address carbon leakage in international trade, developed economies are giving such proposals serious consideration. This article considers the arguments for and against a border carbon adjustment (BCA) for Canada, considering the likely treatment of such measures by the World Trade Organization (WTO) and under Canada's major trade agreements with the European Union, the United States and Mexico, and Indo-Pacific partners. The authors analyze the likely impact of a BCA on carbon-intensive trade between Canada and these trading partners. They conclude that while a carefully designed Canadian BCA could be both WTO-legal and permissible under Canada's major trade agreements, serious political and economic challenges are likely to arise. Since BCAs are by nature protectionist, proponents must advance a stronger case for their effectiveness in addressing global carbon emissions if these mechanisms are to be widely adopted.

Unilaterally optimal climate policy and the green paradox

Consider a Hotelling model with exploration investments, a backstop technology and two groups of countries, a climate coalition and a free-riding fringe.If the coalition is price taker in the fossil fuel market, a higher marginal climate damage leads to a reduction of the coalition’s cumulative fuel consumption, which reduces the fuel price and, thus, induces carbon leakage. If the coalition is sufficiently small or its energy demand is sufficiently price sensitive, both the initial extraction and the cumulative discounted climate damages decrease (no weak/strong green paradox). This also applies if exploration investments are sufficiently productive, so that a lower fuel price leads to a considerably lower total extraction. If the coalition acts strategically in the fossil fuel market, it accounts for terms-of-trade and carbon-leakage effects. Then, a higher marginal climate damage can lead to an increase of the coalition’s cumulative fuel consumption, which prevents a weak green paradox, while a strong green paradox never occurs.In an empirically calibrated economy, we show that a strong green paradox can occur without a weak green paradox and vice versa with a price-taking coalition. With a strategically acting coalition, a weak green paradox can be part of a unilaterally optimal policy reaction.

Key areas and pathways for carbon emissions reduction in Beijing for the “Dual Carbon” targets

China pledges to have its carbon emissions peak before 2030 and achieve carbon neutrality before 2060 (“Dual Carbon” targets). Beijing, the capital of China, needs to take the lead in promoting carbon emissions reduction so as to provide an example for other cities. Based on the extended STIRPAT model and LEAP-Beijing model, this paper assesses the key areas and pathways for carbon emissions reduction in Beijing for the period of 2015–2060 under six different policy scenarios. The results show that energy structure upgrading and energy efficiency improvement are the key drivers for the city's emissions reduction. The realization of “Dual-Carbon” targets requires a low-carbon transition of all sectors, and the priority should first be put on the power, transportation and commercial sectors, followed by the thermal and industrial sectors, finally the residential and agricultural sectors. Considering that there exists a large number of carbon leakage, Beijing should start with the PES scenario, strive to achieve carbon peak by 2025, then accelerate the transition to the CES scenario between 2030 and 2035 depending on the ratio of renewable sources in its imported power, and finally achieve carbon neutrality via emissions absorption approaches such as CCUS and carbon sinks by 2060.

Optimal energy taxes and subsidies under a cost-effective unilateral climate policy: Addressing carbon leakage

We analyse how a country pursuing a unilateral climate policy may contribute to a reduction in global CO2 emissions in a cost-effective way. To do so its system of energy taxes and subsidies must account for leakage of emissions from the domestic to the foreign economy. We focus on leakage occurring via international trade in electricity and via shifts between domestic and foreign production of other goods. The optimal tax-subsidy scheme is based on an intuitive principle: Impose a uniform carbon tax on all additions to global emissions caused by changes in domestic production and consumption of energy, including additions to emissions occurring via shifts in international trade. Emissions from the sector exposed to foreign competition should be taxed at reduced rates to avoid excessive carbon leakage, and a part of the carbon tax on electricity should be levied at the consumer rather than the producer level to ensure taxation of the carbon content of imported electricity. Producers of renewables-based electricity should receive a subsidy to internalize their contribution to the reduction of global emissions. In other sectors emissions should be taxed at a uniform rate corresponding to the marginal social cost of meeting the target for emissions reduction. Simulations calibrated to data for the Danish economy suggest that redesigning energy taxes and subsidies to account for carbon leakage can generate a welfare gain.

The role of sectoral coverage in emission abatement costs: evidence from marginal cost savings

Sectoral coverage that plays a critical role in operationalizing the emission trading scheme (ETS), has gained substantive attention. Despite the insightful views on sectoral coverage from the emission reduction potential or carbon leakage, previous studies overlook the cost-effectiveness of ETS in the sense that the varying marginal contributions of each sector to reducing emission abatement costs (EACs) (which is defined as marginal cost savings, MCSs) remain underexplored. To fill this gap, this paper proposes a costs-oriented approach for sectoral coverage (COASCO), which ranks the sectors by estimating and comparing their MCSs. Taking China’s climate targets by 2030 as an example, we conduct an empirical study that implements the COASCO method to explore the impacts of sectoral coverage on China’s EACs. Our analysis demonstrates that, while coverage extension generally reduces China’s EACs, a small sectoral coverage can already lead to a substantial decline in the national EACs. The results underpin the Pareto principle that covering six sectors (i.e. Electricity production, Metallurgy, Transport and storage, Petroleum and gas, Nonmetal mining) out of 29 can reduce China’s EACs by over 80% compared to covering Electricity production only. Although coverage extension may reduce the differences in EACs between sectors and improve market activation, extending the sectoral coverage probably gives rise to the number of big carbon traders, which thenincreases the risks of market manipulation. As a result, covering those six sectors can reach a balance between ETS market activation and risks. By providing a generalized and systematic framework for determining the sectoral coverage, this study makes it possible to minimize the total EACs associated with any sectoral coverages, thus assisting policymakers in fulfilling China’s latest ambitious goals of reaching carbon peaking by 2030 and carbon neutrality by 2060 in a cost-effective manner.

The evolution of carbon footprint in the yangtze river delta city cluster during economic transition 2012-2015

China has been undergoing an industrial transformation, shifting from an energy-intensive growth pattern. As the most developed region in China, the Yangtze River Delta (YRD) city cluster is leading the industrial transformation. However, the impact of the industrial transformation on carbon footprints in the YRD cities is unclear. By a city-level environmentally extended input-output model, we quantify the carbon footprint of 41 cities in the YRD city cluster for 2012 and 2015 and capture the socioeconomic driving forces of the change by structural decomposition analysis (SDA). The results show that the carbon footprint in 41 YRD cities increased from 1179.4 Mt (14.8% of China's total) to 1329.6 Mt (16.6%) over the period. More than 60% of the footprint concentrated on the 10 largest cities, and the construction sector made the largest contribution, especially in service-based megacities. The change of production structure drove down carbon footprints in YRD cities, except light industry cities and service-based cities. The industrial transfers from the coastal to inland regions result in carbon leakage, where one-third of the carbon footprint is embodied in the trade. We also find the economic recession during the transition period decreased carbon emissions by 154.2 Mt in the YRD city cluster, where the value-added rate in the YRD cities declined over the transition period, especially in service-based cities. The study highlights the positive effects of industrial transformation on low carbon transition, despite being highly heterogenous for cities.

Is border carbon adjustment the right tool for the power sector?

ABSTRACT Carbon leakage occurs in any carbon pricing regime that is not global, which means all of them so far. That is inherently unfair to sectors that are subject to a carbon price but compete with those that are not. The European Green Deal aims to rectify the problem in the EU Emissions Trading System (ETS) by moving beyond the current second (or third) best option, which allocates emissions quotas for free for industrial sectors, and by putting a price on carbon at the EU border for selected but not yet named sectors. Our recent model-based analysis compares the impact of a future border carbon adjustment (BCA) mechanism for the power sector with the option of extending the EU ETS to countries exporting power to the EU. We demonstrate how differences in the two policy tools translate into markedly different impacts. We conclude that expanding the geographical scope of the EU ETS is a more effective climate policy tool than a BCA. First, it would reduce emissions, while a BCA would not. Second, emission trading brings real competition: Regions neighbouring the EU will be better integrated into the EU single market with a level playing field and lower greenhouse gas emissions. On the other hand, the BCA would fence off the EU power sector and increase greenhouse gas emissions. Third, compared to a border carbon tax, expanding the ETS also yields more revenue to exporting neighbouring countries facing higher-than-average challenges to change their fossil-heavy power systems. Key policy insights The introduction of a new policy tool, the border carbon adjustment mechanism, which aims to create fair competition and trigger more ambitious climate policy action in trading partners, is a legitimate action of the European Union. However, the extension of EU ETS is a more effective climate policy tool than a border carbon adjustment mechanism as the latter increases overall emissions. The border carbon adjustment mechanism is rather a competition policy tool that provides a level playing field for electricity producers inside and outside the EU. The price impact of the policy tool choice merits attention: the extension of the EU ETS drives up prices in neighbouring countries (except the West Balkan region), but the additional quota revenues can be used to alleviate the burden on vulnerable social groups.

Prioritizing climate change adaptation needs for hydropower sector in China

Differentiating spatial–temporal hydropower risk triggered by climate change is crucial to climate adaptation and hydropower programming. In this research, we use a fixed-effect model on 5082 plants in China to estimate how the revenue of hydropower plants responded to climate change over 16 years, and project the revenue change and fit the damage function driven by 42 climate realizations. Results show that the revenue change of the hydropower sector demonstrates substantial regional variation and would reduce by 9.34% ± 1.21% (mean ± s.d.) yr−1 on average under RCP 8.5 by 2090s as compared to 2013, about four times larger than that under RCP4.5. Carbon leakage caused by thermal power substitution reaches 467.56 ± 202.63 (112.49 ± 227.45) Mt CO2e under RCP8.5 (RCP4.5). Different climatic conditions manifest locally, and different climate resilience makes the response function regionally heterogeneous. Southwest China is identified as the priority region for adaptation through integrated evaluation of historical climate sensitivity, future climate variability, and regional hydropower importance, informing more adaptation and investment needs of further hydropower development in the area.

Ageing society in developed countries challenges carbon mitigation

Populations in developed countries are ageing. However, the impact of senior citizens’ consumption on global carbon mitigation is poorly understood. Here we find that senior citizens have played a leading role in driving up GHG emissions in the past decade and are on the way to becoming the largest contributor. Considering the greenhouse gas footprint of household consumption across age groups in 32 developed countries, the senior contribution to national total consumption-based emissions increased from 25.2% to 32.7% between 2005 and 2015. Seniors in the United States and Australia have the highest per capita footprint, twice the Western average. The trend is mainly due to changes in expenditure patterns of seniors. The increasing carbon footprint of senior citizens will probably drive domestic production yet have limited effects on international carbon leakage. The demographic change poses more challenges in local mitigation and calls for deeper public mitigation efforts.

Assessing Potential Economic Impacts of the EU CBAM on its Major Trading Partners

Purpose Countries around the world are focusing policy efforts on combating climate change and promoting long-term economic recovery, and major greenhouse gas emitting countries are joining the carbon neutrality declaration. To address the risk of carbon leakage, the EU introduced the CBAM(Carbon Border Adjustment Mechanism) in July 2021. The purpose of this study is to examine the potential economic effects of the CBAM on its major trading partners, including Korea, and to draw implications. Design/Methodology/Approach Using a global, multisector, computable-general-equilibrium model and GTAP database Version 10A, this paper undertakes to assess the potential economic impacts of the CBAM. The baseline scenario was set up using the World Bank’s macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2020 to calculate future estimates. Policy scenarios were established by (1) imposing 30 euros per ton of embedded emissions in the total amount of imports, (2) imposing 30 euros per ton of embedded emissions on five products covered by the CBAM in the European Commission’s July 2021 proposal, (3) imposing 30 euros per ton of CO contained in items that are subject to additional duties, and (4) lastly, the above scenarios 2 and 3 were combined to see the total effects of the CBAM. Findings Simulation results showed that in the case of Scenario 1, wherein tariffs were imposed depending on CO emissions, intra-regional trade and production increased, resulting in a significant growth in consumer welfare in the EU (approximately $12.1 billion). Except for Japan, all major trading partners decreased overall, although there were disparities in size. In particular, China (about $10.9 billion), Russia (about $ 7.1 billion), and India (about $4.2 billion) reported significant drops in consumer welfare. Korea has exported an annual average of about $53.7 billion to the EU for the past six years, with items subject to the CBAM accounting for around $4.17 billion, or 7.8% of total exports. Of these items, iron and steel with a value of about $3.65 billion, accounting for about 87.3% of the total should be a source of concern for the Korean government and the steel industry. According to findings, the steel industry’s exports to the EU are likely to drop by 0.99 percent, resulting in a loss of nearly 310 million euros in exports (about 360 million US dollars). Research Implications This study is meaningful in that it provides reference data to Korean industries that can be directly affected by the CBAM, which has already been introduced and is about to be implemented. For some export industries like the steel industry, in particular, it is necessary for the Korean government to actively support low-carbon technology innovation and accelerate the transition to a low-carbon economy.