The European Union’s CBAM: averting emissions leakage or promoting the diffusion of carbon pricing?
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CJOE_A_2591794_O.pdf
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Author(s)
Mehling, Michael A.
Dolphin, Geoffroy
Ritz, Robert A.
Date Issued
November 13, 2025
Journal
Journal of Environmental Policy & Planning
Publisher
Taylor & Francis
Citation
Mehling, M. A., Dolphin, G., & Ritz, R. A. (2025). The European Union’s CBAM: averting emissions leakage or promoting the diffusion of carbon pricing? Journal of Environmental Policy & Planning, 27(6), 687–705.
Version
Final published version
Abstract
Adopted in 2023, the Carbon Border Adjustment Mechanism (CBAM) is a significant component of the European Union’s ambitious decarbonization strategy under the European Green Deal. This article questions the output effectiveness of the CBAM in achieving its stated objective, prevention of carbon leakage, while demonstrating its impact effectiveness as an instrument for advancing the global diffusion of carbon pricing. Empirical evidence for carbon leakage remains sparse, and implementation challenges might limit the capacity of the CBAM to counteract leakage even where it occurs. Nonetheless, the CBAM has already demonstrated a powerful spillover effect by incentivizing the acceleration of carbon pricing roadmaps across EU trade partners, suggesting that trade-related climate measures can effectively encourage global climate action. As the EU navigates the complexities of operationalizing the CBAM, it must balance several tradeoffs to maintain this important spillover effect. If successful, the CBAM could catalyze a virtuous cycle of carbon pricing adoption, reinforcing its potentially pivotal role in the EU’s toolbox to manage the environment-trade nexus.
MIT Department
MIT Center for Energy and Environmental Policy Research
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Creative Commons Attribution
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DOI of Published Version
https://doi.org/10.1080/1523908X.2025.2591794
