Sino-German Cooperation
on Biodiversity, Climate and Environment
On behalf of International Climate Initiative (IKI)

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.