Abstract This study assesses the implications of the European Union’s Carbon Border Adjustment Mechanism (CBAM), a key component of its ‘Fit for 55’ climate package aimed at reducing emissions by 55 per cent by the year 2030. The research addresses two critical aspects of CBAM: the impact on developing countries and the compliance with the Paris Agreement and World Trade Organization rules. Employing a qualitative analysis, the study reveals that CBAM poses significant economic challenges for developing countries by potentially restricting access to the European Union market and necessitating cost escalations in production processes. Furthermore, the analysis questions CBAM’s alignment with international law, highlighting concerns over its potential violation of the principles of non-discrimination and fairness as stipulated in WTO regulations and the Paris Agreement. By 2030, CBAM is projected to generate huge revenue from imports; however, the absence of financial support, out of that revenue, for developing nations in achieving their climate objectives underscores deeper issues of equity and justice in global climate policies. The findings suggest that while CBAM aims to mitigate carbon leakage and encourage global carbon pricing, it also raises critical ethical and legal questions about the equitable distribution of responsibilities in addressing climate change.
Sharma et al. (Sat,) studied this question.
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