The Impact of Carbon Border Adjustment Mechanism (CBAM) on the Competitiveness of Cement exporters to the EU: The cases of seven major cement exporters to the EU (Turkey, Ukraine, Tunisia, Algeria, Morocco, Colombia, and Belarus)

Mehryar, Hemn ; Ntacyicumutindi, Epimaque

4. Term

Economics and Business Administration (International Business Economics), Master

2021

2021-08-16

67 pages

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.

CO2 and competitiveness

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