Decarbonization reduces carbon border costs for Middle East and North African steel exporters

The European Union’s Carbon Border Adjustment Mechanism is set to reshape trade in carbon-intensive goods and poses a major challenge for steel exporters in the Middle East and North Africa. Here we show how carbon prices, export responses, cleaner production routes and national power sector transitions shape the region’s exposure through 2035. Our analysis combines life-cycle emissions data with scenarios for carbon pricing, trade, technology adoption and power-sector decarbonization. Under high carbon prices, regional liabilities nearly double by 2035. Lower exports reduce these payments but also cut revenues. Ambitious decarbonization lowers liabilities by up to 56 percent compared with business as usual. The main route to lower exposure differs across countries: cleaner electricity is most important in Egypt and Morocco, while both grid reform and production modernization matter in Algeria and Türkiye. Türkiye has the largest absolute exposure, Egypt has the greatest dependence on the European market, and Saudi Arabia has the highest risk from carbon-intensive production. Carbon border costs for Middle Eastern and North African steel exporters could nearly double under high carbon prices but fall by up to 56% with ambitious decarbonization, with priorities varying across countries, based on scenarios of trade, technology, and power-sector transitions through 2035.