Conference Paper
CBAM and Exporting Sectors in the MENA Region
No.
ERF_31_EN170
Publisher
ERF
Date
March, 2025
Topic
Q5. Environmental Economics
Global warming is a major global challenge, prompting many countries to adopt different environmental policies. However, differences in policy stringency have led to carbon leakage. To address the issue of carbon leakage, the European Commission adopted the Carbon Border Adjustment Mechanism (CBAM) in July 2021, which is gradually being implemented starting October 2023. The CBAM aims to prevent carbon leakage by ensuring that the carbon price of imports matches the carbon price of domestic production under the EU Emissions Trading System (ETS). This paper analyzes the impact of CBAM on Middle East and North Africa (MENA) countries. We examine how the carbon tax will influence exports and carbon emissions in the affected sectors in MENA countries. By using sector-country level data, the paper aims to shed light on what policy recommendations are key for these countries to maintain their exports to the EU given the new regulations.
Speakers
Hoda Assem
Economist, International Monetary Fund (IMF)
Authors
Aya Elewa
Researcher, Department of Research in Innovation and...