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Trade and Development Chart: CBAM’s impact on exports to the EU

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The World Bank's CBAM Exposure Index aids developing nations in anticipating the effects of the new tariff on their exports to the EU.

The World Bank's Relative CBAM Exposure Index helps developing nations anticipate the effects of the new charge on their exports to the EU.

Starting in 2026, the European Union will require importers of certain carbon-intensive goods to pay for their products’ embodied carbon emissions. The policy, known as the Carbon Border Adjustment Mechanism (CBAM), could have a significant impact on the competitiveness of these products on the EU market. To help developing country exporters prepare, the World Bank created the CBAM Exposure Indexes.

An exporting country's exposure to the CBAM is determined by two factors: its carbon emissions in production compared to the average EU producer and its reliance on exports to European markets. It is important to note that this analysis uses sector-wide averages, not emissions from individual firms, although CBAM applies to the firm level exporters. Firms that produce goods like steel for export may have lower emissions than those producing for the domestic market. Consequently, this metric may overstate exporters’ exposure to the CBAM.

 

This chart was originally posted on December 04, 2023 and has since been updated.

Blog: How developing countries can measure exposure to the EU’s carbon border adjustment mechanism

Dashboard: CBAM Exposure Indexes


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