CMW’s position on the Carbon Border Adjustment Mechanism

Carbon Market Watch argues that the Carbon Border Adjustment Mechanism (CBAM) must be implemented as a full alternative to free emission allowances to avoid market failures and incentivize industrial decarbonisation. The organization demands that the CBAM's scope be expanded to include bulk chemicals and indirect emissions, and that it provide special exemptions or support for Least Developed Countries (LDCs) and Small Island Developing States (SIDS). Furthermore, it advocates for the full earmarking of CBAM and EU ETS revenues for climate action, both within the EU and as international climate finance, while opposing the introduction of export rebates for EU companies.

• The overlap between CBAM and the continued allocation of free emission allowances is counterproductive and delays the 'polluter pays principle'. Carbon Market Watch asserts that removing free allowances in target sectors would lead to significant additional emission reductions without creating a substantial risk of carbon leakage.
• The scope of the CBAM should be expanded beyond iron, steel, aluminium, fertilisers, and cement to include other bulk chemicals, such as plastics. Additionally, it should cover 'scope 2' indirect emissions from electricity used in manufacturing to encourage the adoption of renewable energy and cleaner production processes.
• The EU should provide special treatment for Least Developed Countries (LDCs) and Small Island Developing States (SIDS), potentially through de facto exemptions. This would address the 'unintended economic risks' and administrative burdens these nations face without significantly impacting carbon leakage, as LDCs are generally not major exporters to the EU, with the exception of aluminium from Mozambique (7.7% of EU imports).
• Revenues from CBAM and the EU Emissions Trading System (ETS) should be fully earmarked for climate action rather than being used as 'own resources' to repay EU Covid-19 recovery debt. A substantial portion should be recycled as international climate finance to help developing countries decarbonise their industries.
• Export rebates for European companies should be excluded from the CBAM design. Such rebates would likely violate World Trade Organization (WTO) rules, create perverse incentives to redirect carbon-intensive production toward exports, and undermine the goal of pricing carbon regardless of the end market.

APA

Carbon Market Watch (n.d.). CMW’s position on the Carbon Border Adjustment Mechanism. https://carbonmarketwatch.org/wp-content/uploads/2022/01/CMWs-position-on-CBAM-proposal.pdf

Chicago

Carbon Market Watch. CMW’s position on the Carbon Border Adjustment Mechanism. n.d. https://carbonmarketwatch.org/wp-content/uploads/2022/01/CMWs-position-on-CBAM-proposal.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=CMW’s position on the Carbon Border Adjustment Mechanism |url=https://carbonmarketwatch.org/wp-content/uploads/2022/01/CMWs-position-on-CBAM-proposal.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatchndcmws, author = {{Carbon Market Watch}}, title = {{CMW’s position on the Carbon Border Adjustment Mechanism}}, publisher = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2022/01/CMWs-position-on-CBAM-proposal.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }