The Asian Development Bank (ADB) reported that the European Union’s plan to impose tariffs on high-carbon imports might harm developing Asian countries. However, it’s unlikely to reduce greenhouse gas emissions significantly.
The Carbon Border Adjustment Mechanism (CBAM) addresses worries that outsourcing manufacturing has placed much of the EU’s supply chain beyond the reach of its emissions trading scheme (ETS).
Neil Foster-McGregor, ADB’s senior economist, said, “It’s actually a relatively limited policy at the moment. It only imports into the EU (and) only covers six sectors.”
“The way the scale of production is increasing, even if we do this carbon pricing more broadly across the globe, you’re still going to see rising emissions unless we see a fundamental change in production techniques,” Foster-McGregor added.
Also read: EU carbon border tax will do little to cut emissions, says ADB study
The aim was to make foreign suppliers pay the same carbon price as domestic ones, even if they don’t have an ETS or carbon tax at home.
The ADB noted that the CBAM could reduce Asian exports to the EU, especially from western and southwestern Asia, including India’s steel exports.
However, any emission reductions from this measure would be overshadowed by Asia’s ongoing rise in carbon-intensive production. The ADB suggested that sharing emission reduction technology would be a more practical approach.
