Policy Options to Address Export-Related Carbon Leakage

The EU Carbon Border Adjustment Mechanism (CBAM) is designed to ensure that European industrial companies remain competitive despite rising carbon prices. The CBAM thus enables ambitious European climate policy. However, it only covers imports into the EU: The question of whether and how the EU should take action to secure the competitiveness of exporting companies is still unresolved.

The Ecologic Institute study "Policy Options to Address Export-Related Carbon Leakage" commissioned by Germanwatch offers answers to precisely this questions. The study analyses different approaches to ensure the competitiveness of export-oriented companies and evaluates them on the basis of various criteria. While free allocation of certificates and export subsidies score poorly in the evaluation, the study authors recommend targeted innovation support as a particularly beneficial policy instrument.