Quantifying EU CBAM Exposure of Türkiye’s Steel Industry and Downstream Construction Cost Sensitivity

The Carbon Border Adjustment Mechanism (CBAM) enacted by the European Union (EU), aimed at reducing carbon emissions at a global scale, has significant trade and financial implications for global steel exporters. As one of the EU’s largest trading partners, Türkiye faces significant challenges and opportunities under this framework, particularly in the steel industry, which is a critical input to the construction sector. This study analyzes the potential impacts of CBAM on Türkiye’s steel exports to the EU by 2030 and their broader effects on the downstream EU construction sector, incorporating historical production and trade data, carbon intensity benchmarks, a range of carbon pricing scenarios, and downstream construction cost pass-through assessments. Results demonstrate that under business-as-usual conditions at a CBAM certificate price of 100–150 €/tCO2e, the use of standard basic oxygen furnace-based benchmarks yields liabilities of €1.75–2.63 billion, whereas accounting for Türkiye’s national weighted carbon intensity for steel reduces estimated annual CBAM liabilities to €0.82–1.23 billion, corresponding to 17–25% of revenue from steel exports to the EU. Establishing a national emissions trading system emerges as a critical policy option, retaining €85–210 million annually in domestic revenues and reducing net border surcharges to 4.3–11.2% of export revenue. Achieving Türkiye’s Nationally Determined Contribution target of a 41% emission reduction further caps liabilities at 4.1–5.1%. Downstream analysis indicates that CBAM-related steel price increases translate into an estimated 3.5–9.4 €/m2 increase in steel-related construction material costs for reinforced-concrete structures under the national weighted baseline, whereas sourcing solely from electric arc furnace routes limits this increase to 1.8–4.8 €/m2. Reinvesting national emissions trading system revenues in renewable electricity, grid decarbonization, and electric arc furnace modernization could reduce future carbon exposure and support industrial competitiveness.