By Yu Min, Research Institute of Resources and Environmental Policies, DRC

Research Report, No.292, 2021 (Total 6357) 2021-10-8

Abstract: The EU and the U.S. launched their respective draft regulations on the establishment of a Carbon Border Adjustment Mechanism (CBAM) in July, revealing their collaborative cooperation on promoting the CBAM. According to the draft contents, the EU’s CBAM will cover five kinds of products and three kinds of greenhouse gases and will conduct an across-the-board management through the issuance of CBAM certificates. While the US CBAM has a broader coverage and its institutional arrangements focus on the domestic environmental cost. Through the comparative analysis, it could be found that the similarities between these two mechanisms are quite limited whereas rather big differences remain between them in terms of coverage, pricing mechanism, greenhouse gases border determination, exemption mechanism and fund use. The EU and US CBAM drafts and related elaborations have released three signals: 1. The CBAM aims at reshaping the international rules; 2. It is a long and thorny way to implement the CBAM; 3. The unilateral CBAM might evolve into multilateral Carbon Border Adjustment Alliance. We need to pay high attention to the future performance of CBAM and prepare relevant countermeasures.

Keywords: Carbon Border Adjustment Mechanism (CBAM), comparative analysis, trend, EU, the U.S.