Decarbonisation dominoes: carbon border adjustments could increase clarity Report

Insight 02 November 2021

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Report summary

The European Union released the world’s first proposal for a carbon border adjustment in July. While the proposal governs EU trade, the biggest impacts may be the reactions of players outside the EU’s borders. How will other countries respond to the EU’s proposal? Are companies prepared for those governmental policy responses? And are there ways companies or governments can circumvent border adjustments? In this insight, we examine how countries may adjust their carbon charge policy in response to a border adjustment, how companies are planning for carbon charges, and how these reactions may provide clarity for investors.

Executive summary
Europe addresses carbon emissions from imports
Which countries will be most impacted?
The world addresses tax leakage
Optimising electricity sources may ease the economic burden
The European Commission is looking to expand the CBAM
The affected industries are prepared for this, right?
How are oil and gas companies planning?
CBAMs’ domino effect may establish clarity
But there are downsides too
Is the future of carbon economics coming into focus?

Tables and charts

This report includes 7 images and tables including:

Hypothetical 2021 CBAM charge for covered products originating from Russia and Canada
EEA trading partners most affected by the proposed CBAM
Example of carbon tax flow and trade with CBAM