The EU Carbon Border Adjustment Mechanism and how to get non-EU nations onboard

The Carbon Border Adjustment Mechanism (CBAM) introduced by the European Union is a policy innovation aimed at imposing carbon taxes on imports. This to reduce the risk of carbon leakage and create fair competition. However, the CBAM is frequently viewed by non-EU countries as an additional trade barrier. This comparative analysis, drawing upon rational choice theory, explores the design of a potential response within an emission trading system framework that would allow non-EU countries to avoid CBAM payments. Policy lessons from the US Acid Rain Program (US ARP) and the EU Emission Trading System (EU ETS) can guide this process.