Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322393 
Year of Publication: 
2025
Series/Report no.: 
ADB Economics Working Paper Series No. 792
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
This paper employs a computational general equilibrium model to examine the potential impact of the European Union's Carbon Border Adjustment Mechanism (CBAM). The paper considers the impact of extending CBAM to other economies, examining whether approaches that require increased coordination of carbon pricing over a greater number of jurisdictions can increase the impact of CBAM. Results suggest that while an expanded scheme of carbon prices and border carbon taxes can reduce emissions, underlying global economic growth trends are more than enough to quickly undo the highest emissions reductions modelled here. As such, sustained technical innovation and major changes in the underlying structure of energy systems will be required to meet Intergovernmental Panel on Climate Change (IPCC) targets. The results also reinforce another message of recent IPCC reports, namely that in some cases the potential impacts of mitigation actions through domestic and trade-related carbon taxes may fall disproportionately on poorer regions.
Subjects: 
computable general equilibrium
carbon pricing
border carbon adjustments
JEL: 
C68
Q56
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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