Impact of the EU Carbon Border Adjustment Mechanism on the Global South

The European Union Carbon Border Adjustment Mechanism (EU CBAM), currently in its transitional phase, represents a novel approach by the EU to address the threats of carbon leakage and environmental dumping, while promoting greener production systems and decarbonizing industrial sites. The CBAM also enables the EU to protect the international competitiveness of its domestic products through the application of an additional “fair price” to goods exported from third countries, when it cannot be demonstrated that an appropriate carbon price has been paid in the country of origin. Despite these benefits, scholars have raised concerns about the potential negative effects of this measure on the competitiveness of producers located in the Global South. The EU has already expressed its support for developing countries. However, in the absence of a timely and well-defined EU strategy for assistance, various frameworks have been proposed for the provision of aid. The most widely discussed of these proposals include the exemption of LDCs and developing countries from the CBAM and the distribution of CBAM revenues to third countries, to facilitate their green transition processes. Striking a balance between environmental and economic needs will be crucial for ensuring the success of this tool and an agreed upon pathway to a just transition.