The EU carbon border adjustment mechanism (CBAM) and China: unpacking options on policy design, potential responses, and possible impacts

The EU has announced ambitious new climate targets, pledging to reduce greenhouse gas (GHG) emissions by 55 percent by 2030 and achieve carbon neutrality by 2050. To help achieve these goals, the EU proposed implementing a carbon border adjustment mechanism (CBAM) in its European Green Deal legislation. As the EU CBAM will put a price on the GHG emissions embedded in goods imported into the bloc, the mechanism will have a significant effect on both international trade and climate diplomacy. Understanding how the CBAM will impact China is critical, as it is one of the EU’s main trading partners and has also announced its own carbon neutrality target. Against this backdrop, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) commissioned the German climate think tank adelphi as well as the Chinese Tsinghua University to shed light on how the forthcoming EU CBAM will interact with China’s carbon and trade landscapes, as well as how the mechanism can enhance climate diplomacy between the two trading partners. The paper is also available in Chinese.

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Sino-German Cooperation on Emissions Trading Systems, Carbon Market Mechanisms, and Industry-related N2O Mitigation

Project country
China
Political Partners
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); Ministry of Ecology and Environment of the People's Republic of China (MEE)
Implementation Partners
National Center for Climate Change Strategy and International Cooperation of the People's Republic of China (NCSC)
Duration
07/2012 - 09/2022

The project has been supporting the development of ETS in China since 2012. Since the launch of the Chinese national ETS, the project provides support to further refine the ETS and strengthen the political and technical dialogue between China and Germany on carbon market topics. Since 2020, the project also supports the abatement of industry related N2O emissions through capacity building, studies, workshops, and various exchange formats.