Carbon Border Adjustments: Climate Protection or Climate Protectionism?

Carbon Market Watch argues that the EU should replace the free allocation of emission allowances in the EU ETS with a Carbon Border Adjustment Mechanism (CBAM) to ensure polluters pay for their emissions. The organization asserts there is no evidence of carbon leakage and proposes that a CBAM should be used as a tool for international climate diplomacy, exempt Least Developed Countries and Small Island Developing States, and be based on carbon performance benchmarks for sectors including steel, cement, chemicals, and power.

• Carbon Market Watch contends that free allocation of pollution permits under the EU ETS is unnecessary because there is no evidence that carbon leakage has occurred due to climate policies, and theoretical risks are limited to scenarios with very high carbon prices.
• The organization argues that a CBAM is preferable to free allocation because it ensures polluters pay, provided that all free allocations under the EU ETS are phased out completely and rapidly to avoid protecting industries twice.
• To align with the Paris Agreement's principle of common but differentiated responsibilities and respective capabilities (CBDR-RC), the EU should exempt Least Developed Countries (LDCs) and Small Island Developing States (SIDS) from CBAs and allocate the majority of CBAM revenues to developing countries as climate finance.
• The proposed CBAM should initially cover the power sector and the steel, cement, and chemicals sectors, as these three industrial sectors represent nearly 60% of industrial emissions under the EU ETS.
• Carbon Market Watch recommends implementing the CBAM by requiring importers to purchase EU allowances (EUAs) that are cancelled immediately upon entry to the EU market, rather than using a border tariff, to avoid the need for unanimity in EU taxation decision-making.

APA

Carbon Market Watch (2020). Carbon Border Adjustments: Climate Protection or Climate Protectionism? https://carbonmarketwatch.org/wp-content/uploads/2020/03/CMW-position-on-CBAM.pdf

Chicago

Carbon Market Watch. Carbon Border Adjustments: Climate Protection or Climate Protectionism? 2020. https://carbonmarketwatch.org/wp-content/uploads/2020/03/CMW-position-on-CBAM.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Carbon Border Adjustments: Climate Protection or Climate Protectionism? |date=March 2020 |url=https://carbonmarketwatch.org/wp-content/uploads/2020/03/CMW-position-on-CBAM.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2020carbon, author = {{Carbon Market Watch}}, title = {{Carbon Border Adjustments: Climate Protection or Climate Protectionism?}}, publisher = {Carbon Market Watch}, year = {2020}, month = mar, url = {https://carbonmarketwatch.org/wp-content/uploads/2020/03/CMW-position-on-CBAM.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }