Models for the analysis of international interrelations of the EU ETS and of a CBAM

Summary

This research project, completed in 2025, evaluated the effectiveness of macro-econometric and computable general equilibrium models in analyzing the international economic and emission impacts of the EU Emissions Trading System (EU ETS) and a Carbon Border Adjustment Mechanism (CBAM), with a focus on carbon leakage. The study concluded that a well-designed CBAM significantly mitigates carbon leakage risks and positively influences industrial production and GDP, suggesting that carbon leakage is not a convincing argument against ambitious EU climate action. The report aims to assist practitioners and researchers in interpreting and conducting model-based scenario analyses for climate policy assessments.

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Source Document

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