As part of a plan to decarbonize its economy by 2050, the European Union (EU) is considering the
introduction of a carbon border adjustment mechanism (CBAM) to reduce the risk of carbon
leakage and to level the field for European industries working towards decarbonization of their
production processes.
This thesis assesses the potential effects of the CBAM on competitiveness of cement exporters to
the EU. We quantify the cost burden of CBAM thereby cost competitiveness loss of seven major
cement exporters to the EU. Then we dig into the institutional preparation of three major exporters
and deeply analyze them to figure out the potential adoption of regulations which lead to
adaptation to the CBAM. The results confirm that the CBAM would have a significant negative
cost competitiveness on all major cement exporters to the EU and it would increase over time as
the free allocation of emission allowances would begin to phase out. Though the level of impact
is lower in the countries which have lower carbon-intensive cement production than other
countries. Additionally, the results show that the institutional initiatives regarding adoption of
carbon pricing systems and carbon abatement regulation in the exporter country, can alter their
firms adaptation to the CBAM and thereby increase opportunities to maintain their market shares
in the EU.