Day 2 04 04 Jomo Kwame Sundaram

Sovereign Debt and Climate Finance Conference
Organized by Political Economy Research Institute (PERI) & International Development Economics Associates Limited (IDEAs)
May 3- 5, 2024 at Gordan Hall, UMass Amherst.

[@usedcarsalesman123]

Everything this guy said about CBAM is wrong. CBAM is not the central instrument of decarbonisation of the EU and is never intended to be. CBAM only exists because of EU ETS which is carbon price european industry (and power sector) has to pay. ETS free allocation will gradually phase out and CBAM will gradually phase in. The minimal climate impact of CBAM is an irrelevant and ignorant argument, because the main climate impact is the EU ETS, the emissions the EU can actually control.
CBAM price is not arbitrary. The EU ETS price determines the CBAM price (level playing field) and CBAM is not country specific, it only cares about the factory level emissions. You have to calculate your own emissions following a specific methodology. You can have a fully decarbonised industry process in a not fully decarbonised non EU country and you will not pay any CBAM price.
If the non EU industry already pays a carbon price they can deduct it from the CBAM price. This means the non EU country can collect the full amount of the carbon tax and use it for decarbonasing their industry.
CBAM will have higher negative effect for EU industry, after the free allocation phase out european products will be more expensive and less competitive in the global market. European consumers will pay a higher price for the local and imported decarbonised products.