Volume 50 (2025)
Empirical Evaluation of CBAM and ETS Linkages: Impacts on Trade, Welfare, and Developing Country Exporters
(Pages 40-52)
Author(s)
Do Phu Hai1
1University of Economics and Business, Vietnam National University – Hanoi, Vietnam,
Abstract:
The operationalization of the EU’s Carbon Border Adjustment Mechanism (CBAM) alongside its Emissions Trading System (ETS) presents a critical, yet under-explored, nexus of trade and climate policy. This study fills that empirical gap by applying gravity-model estimations and stylized computable general equilibrium simulations to six developing-country exporters (Vietnam, Indonesia, Morocco, South Africa, Egypt, and India). We show that the CBAM×ETS linkage contracts carbon-intensive exports by 9–21%—with variations driven by emission intensity and adaptive capacity—and nearly doubles EU welfare losses relative to an ETS-only regime. By integrating bilateral trade-elasticity estimates with welfare modeling, we deliver the first multidimensional empirical assessment of climate-linked border adjustments, offering a rigorous framework for designing equitable, effective carbon-pricing measures in global trade.
Keywords:
Carbon Border Adjustment Mechanism (CBAM), Emissions Trading System (ETS), Gravity‐model estimation, Computable General Equilibrium (CGE), Developing country exporters.
Cite this paper:
Do Phu Hai, Empirical Evaluation of CBAM and ETS Linkages: Impacts on Trade, Welfare, and Developing Country Exporters, The Journal of Social, Political and Economic Studies. Volume 50, Year 2025 | PP. 40-52. https://thejspes.com/vol50-a5
© 2025 The Author(s). Published by 'The Journal of Social, Political and Economic Studies'.
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