Climate change is not only an environmental emergency but also a major driver of global inequality. The European Union’s Carbon Border Adjustment Mechanism (CBAM) represents an attempt to connect climate ambition with international trade by ensuring imported goods carry a carbon cost comparable to those produced within the EU. While the policy aims to encourage decarbonisation and maintain fair competition, its implications for developing economies, employment, and social equity remain uncertain.
This project will offer one of the first empirical evaluations of the mechanism using an ex-post
approach. It relies on a structural gravity framework to analyse changes in trade flows and draws
on data from UN Comtrade, CEPII BACI, EDGAR, and ILOSTAT to measure shifts in carbon intensity, welfare, and labour market outcomes. Combining these datasets with rigorous quantitative analysis provides a clear picture of how the policy reshapes trade patterns and whether it supports a just transition.
The study aligns closely with SEDarc’s themes of Living Sustainably and Inclusive Economic Growth, particularly its focus on how climate policy shapes environmental outcomes and the distribution of economic and social impacts across countries and social groups. The findings will be valuable for organisations such as the United Nations Conference on Trade and Development, supporting developing countries in managing trade adjustments and promoting fair growth. By offering evidence on environmental and social consequences, the research aims to guide future climate trade policies
that advance sustainability while supporting people and regions most exposed to economic
transition.