Publication alert: How industrial policy can level the carbon playing field for EU exporters, with Michael Mehling doi.org/10.1017/S147... - ThreadSky

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ct-economics.bsky.social • 27 days ago

Publication alert: How industrial policy can level the carbon playing field for EU exporters, with Michael Mehling

https://doi.org/10.1017/S1474745624000405

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ct-economics.bsky.social•27 days ago

The EU’s CBAM is a landmark policy to level the carbon playing field on the domestic market. However, EU exporters face a disadvantage on the world market against foreign competitors not subject to stringent climate measures.

ct-economics.bsky.social•27 days ago

This increases global emissions and undermines the competitiveness of EU firms. To address these concerns of EU exporters in CBAM sectors, we suggest using targeted innovation support for export-intensive CBAM sectors, without tying the support to a firm’s export volumes.

ct-economics.bsky.social•27 days ago

This approach stands a higher chance of passing muster before the WTO than other options, such as export rebates. We discuss such legal aspects in a recent article in the Journal of World Trade https://doi.org/10.54648/trad2024023

ct-economics.bsky.social•27 days ago

Innovation support would also likely be less contentious politically and diplomatically. In addition, as it benefits only clean producers, it would help to accelerate the net-zero transition.

ct-economics.bsky.social•27 days ago

We estimate that exporters would initially require financial support to the tune of 14 bn € per year, which can be expected to decline as the costs of clean technologies come down.

ct-economics.bsky.social•27 days ago

This is substantially below the about 20 bn € of foregone revenues due to free allocation of emission permits that will be freed up as the CBAM gradually replaces free allocation.

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