A0447
Title: A robust empirical analysis of the EU carbon border adjustment mechanism: Early signals from EU and India steel trade
Authors: Gian Luca Vriz - University of Edinburgh (United Kingdom) [presenting]
Theodor Cojoianu - University of Edinburgh (United Kingdom)
Carolyn Fischer - World Bank Group (United States)
Luca Taschini - University of Edinburgh (United Kingdom)
Abstract: The European Union's carbon border adjustment mechanism (CBAM) aims to reduce carbon leakage by applying a carbon price on imports from countries with less stringent environmental standards. The initial impact of CBAM is examined on the iron and steel trade between the European Union and India. Using firm-level emissions data and trade data, a robust empirical framework is developed to classify a sample of Indian exporters by emission intensity and track changes in their export behavior during the CBAM's reporting phase. A difference-in-differences methodology is applied to assess variations in shipment sizes and unit prices. The results suggest that CBAM influences firm competitiveness and supply chain configurations, even before its full implementation in 2026. The analysis emphasizes the importance of policymakers to consider carbon intensity in their international trade strategies and highlights the value of firm-level data in assessing the real-world impacts of environmental policies.
