1. Transforming EU Climate Leadership through CBAM Reform
- Author:
- Ian Mitchell and Beata Cichocka
- Publication Date:
- 09-2024
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development (CGD)
- Abstract:
- The EU’s Carbon Border Adjustment Mechanism (CBAM) incentivises key countries, including China and India, to assess their policies around industrial carbon emissions. But CBAM faced criticism from low-income countries at COP28, with evidence suggesting that its economic impact on Africa could be as much as three times the amount of EU aid to the continent. While major emerging economies should face the full incentives from CBAM, lower income countries require a different approach. The Commission must review CBAM's impact on least developed countries (LDCs) by 2025. We propose it collaborates with the Council and Parliament to reform CBAM in two ways: Implement a longer transition period for LDCs, following the principle of "Common but Differentiated Responsibilities" Revisit the European Parliament’s proposal to allocate additional finance to the most vulnerable countries, by proposing that CBAM revenues be used to finance climate-related loss and damage, amounting to around 1 percent of the Commission’s annual budget by 2030. These reforms would show the EU is listening to partner countries and provide a new and additional source of climate funding. This would transform its reputation and strengthen its international negotiating position.
- Topic:
- Climate Change, Development, European Union, Carbon Emissions, and Carbon Border Adjustment Mechanism (CBAM)
- Political Geography:
- China, Europe, and India