Ma inez, Juan Diego
A icle
Impac o he Eu opean Ca bon Bo de Adjus men
Mechanism (CBAM) on he Ge man indus y
Junio Managemen Science (JUMS)
P o ided in Coope a ion wi h:
Junio Managemen Science e. V.
Sugges ed Ci a ion: Ma inez, Juan Diego (2024) : Impac o he Eu opean Ca bon Bo de Adjus men
Mechanism (CBAM) on he Ge man indus y, Junio Managemen Science (JUMS), ISSN 2942-1861,
Junio Managemen Science e. V., Planegg, Vol. 9, Iss. 4, pp. 1964-1993,
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ISSN: 2942-1861
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DOMINIK VAN AAKEN
Ad iso y Edi o ial Boa d:
FREDERIK AHLEMANN
JAN-PHILIPP AHRENS
THOMAS BAHLINGER
MARKUS BECKMANN
CHRISTOPH BODE
SULEIKA BORT
ROLF BRÜHL
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DODO ZU KNYPHAUSEN-AUFSESS
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HANS-ULRICH KÜPPER
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JÜRGEN MÜHLBACHER
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Volume 9, Issue 4, Decembe 2024
JUNIOR
MANAGEMENT
SCIENCE
Aline Isabelle Lanz a h,The Daugh e E ec : Does Raising
Daugh e s In luence Fa he s' Gende -Rela ed
A i udes in he Wo kplace?
Sa a Luisa Nussbaum, Women in Leade ship Posi ions and
Fi m Inno a ion: A e The e Di e ences Be ween
Coun ies?
Julian F ied ich Joswowi z, Spi zede , Schmide , Ma salek:
Wha Role Does he Human Fac o Play in Accoun ing
Scandals?
Nicolas on Bodman, The Impac o P ospec us Language on
IPO Unde p icing: A Tex ual Analysis o Eu opean IPOs
Juan Diego Ma inez, Impac o he Eu opean Ca bon Bo de
Adjus men Mechanism (CBAM) on he Ge man
Indus y
Ma eike Polle, Reusable Packaging Sys ems o Res au an s
and Deli e y Se ices: A S udy o Consume
P e e ences and Adop ion Ba ie s o P omo e Public
Accep ance in Ge many
Niklas Thomas S a z, Road o a Bioeconomy in he Eu opean
Union: Mapping D i e s o P ecision Fe men a ion
Adop ion
Elisa Schul e genann Kulkmann, In he Eye o he Beholde :
Examining he Role o Dynamic Capabili ies, Indus y
Dynamics, and In e nal Knowledge Sha ing in
S a egis s' En y Decisions
Saskia Hahn, De elopmen o a P ocess Model o Mission-
D i en Co po a e Reb anding
Jakob Phillip Kla , A Cos -E ec i e Fu u e o Elec ici y
S o age - An Examina ion o LCOS S udies on
S a iona y Applica ions
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Published by Junio Managemen Science e.V.
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ISSN: 2942-1861
Impac o he Eu opean Ca bon Bo de Adjus men Mechanism (CBAM) on he
Ge man Indus y
Juan Diego Ma inez
Technical Uni e si y o Munich
Abs ac
The Eu opean Commission’s p oposal o a Ca bon Bo de Adjus men Mechanism (CBAM) aims o add ess ca bon emissions
in impo s o he EU. This hesis esea ches he inancial implica ions o expo ing coun ies due o CBAM’s implemen a-
ion, ocusing on how i may al e p oduc ion cos s, demand dynamics, and global ading ela ionships. Using a quan i a i e
esea ch app oach, he s udy analyzes exis ing ca bon ma ke landscapes and Ge many’s ade ies wi h non-Eu opean ex-
po e s in key sec o s like i on, s eel, aluminum, polyme s and chemicals. I e alua es CBAM guidelines and assesses po en ial
weaknesses in de e mining embodied CO2 emissions. Resul s sugges CBAM may no d as ically shi p oduc ion cos s o
demand pa e ns immedia ely. China, wi h inhe en cos ad an ages, may main ain compe i i eness, while India’s ad an ages
could diminish by 2035. Howe e , unce ain ies pe sis on CBAM’s long- e m impac on global ade dynamics. The analysis
highligh s CBAM’s une en inancial bu den ac oss expo e s, in luenced by ene gy s uc u es and p oduc ion echnologies.
Weaknesses in CBAM’s calcula ion me hods a e highligh ed, ecommending s anda dized guidelines o ensu e accu a e emis-
sions epo ing. This s udy p omp s policymake s o e alua e CBAM’s e ec i eness in mee ing clima e goals while main aining
global ade equi y.
Keywo ds: CBAM; ca bon p icing; co po a e ESG; deca boniza ion; Eu opean Ca bon Bo de Adjus men Mechanism
1. In oduc ion
The Six h Assessmen Repo o he IPCC pain s a sobe -
ing pic u e o he impac s o clima e change al eady being
wi nessed, including humani a ian c ises and i epa able en-
i onmen al damage. Acco ding o he assessmen , o p e-
en a 1.5◦C empe a u e ise, global emissions o g een-
house gases would ha e o all by 43% by 2030. To achie e
his, all sec o s o he economy mus apidly educe hei
emissions (IPCC, 2022). La e in 2022, wo ld leade s cong e-
ga ed o he Con e ence o he Pa ies o he UNFCCC (COP
27), whe e hey ein o ced hei pledge o p e en a 1.5◦C
empe a u e ise.
I ex end my since e app ecia ion on o P o . D . S e lana Ikonniko a
o he aluable guidance and suppo du ing he de elopmen o my
mas e ’s hesis. Fu he mo e, I am o e e g a e ul o my amily o hei
unwa e ing suppo h oughou my jou ney.
Acco ding o analysis by he In e na ional Ene gy Agency
(IEA), howe e , he e is a conside able disc epancy be ween
wha na ions ha e commi ed and wha can be accomplished
wi h he cu en implemen ed policy. Many na ions equi e
addi ional policies o each hei a ge s (IEA, 2021,2022b;
UNFCCC, 2022). The Eu opean Commission, in an e o
o expand i s ca bon p icing policy and each i s a ge s,
eleased a p oposal o a Ca bon Bo de Adjus men Mech-
anism (CBAM) in July 2021. The CBAM basically in ol es
imposing a ca bon p ice o impo s o speci ic p oduc s om
non-Eu opean coun ies in o he Eu opean Union (EU), p o-
po iona e o he i ems’ "embodied ca bon dioxide (CO2)
emissions," o he emissions o CO2c ea ed du ing hei man-
u ac u ing. CBAM will ini ially co e se e al speci ic goods
om some o he mos ca bon-in ensi e sec o s, comp is-
ing i on and s eel, cemen , e ilise s, aluminum, elec ici y,
and hyd ogen, as well as some p ecu so s and downs eam
p oduc s.
DOI: h ps://doi.o g/10.5282/jums/ 9i4pp1964-1993
© The Au ho (s) 2024. Published by Junio Managemen Science.
This is an Open Access a icle dis ibu ed unde he e ms o he CC-BY-4.0
(A ibu ion 4.0 In e na ional). Open Access unding p o ided by ZBW.
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1965
The aim o his hesis is o examine he po en ial inancial
epe cussions ha may a ise om he implemen a ion o he
Ca bon Bo de Adjus men Mechanism (CBAM) o expo -
ing coun ies. The esea ch seeks o es ima e o wha ex en
CBAM will a ec he p oduc ion cos s o goods, leading o
changes in demand and ading ela ionships be ween coun-
ies in bo h he sho and long e m. Speci ically, he analysis
will in es iga e whe he he inancial bu den esul ing om
CBAM will be equi ably dis ibu ed among all na ions o i i
will disp opo iona ely a ec majo ading pa ne s.
To accomplish his, he s udy will analyze he cu en
global landscape o he ca bon ma ke , including ini ia i es
aken by non-Eu opean coun ies o p ice CO2emissions.
Addi ionally, i will iden i y Ge many’s ading ela ionships
wi h non-Eu opean expo e s o goods in he scope o CBAM.
The s udy will ocus on goods such as i on, s eel, aluminum,
and polyme s, which a e likely o ha e a signi ican impac ,
gi en Ge many’s s ong au omo i e indus y.
The analysis will also iden i y key cha ac e is ics o he
CBAM guidelines and e alua e i s weaknesses, wi h pa icu-
la ocus on he ac ual de e mina ion o embodied CO2emis-
sions in goods. I will highligh he ac ha wi hou a s an-
da dized me hod o calcula ing embodied CO2emissions,
he e ec o CBAM may be diminished in he sho and long
e m. To illus a e his poin , i will calcula e he embodied
emissions con ained in goods expo ed o Ge many in 2021
using di e en me hods and compa e he esul s.
Finally, his s udy will assess how he exis ing cos ad-
an ages o he majo non-Eu opean ading pa ne s o Ge -
many will be a ec ed by CBAM, depending on he me hod
o calcula ion o embodied emissions in goods. I can be in-
e ed ha he p oduc ion p ocesses and echnologies used
in each coun y will ha e an impac on he indi idual inan-
cial bu den o each coun y. The s udy will conclude by dis-
cussing po en ial shi s in demand o goods om one coun-
y o ano he and analyzing whe he CBAM will ha e a sig-
ni ican e ec on global ade.
2. Li e a u e e iew
2.1. Ca bon p icing
Go e nmen s can u ilize ca bon p icing, a policy ins u-
men , as pa o hei o e all plan o educe g eenhouse gas
(GHG) emissions, such as CO2. Once he CO2( e e ed o as
“ca bon”) emissions a e p iced, he e is a mone a y incen i e
o lessen hem o p omo e emo als. Ca bon p icing can al e
p oduc ion, consump ion, and in es men pa e ns, he e o e
p omo ing low-ca bon g ow h by ac o ing clima e change
cos s in o economic decisions. Ca bon may be p iced using
a wide ange o policy mechanisms, which can each be cus-
omized o local condi ions, p io i ies, and demands. Ca bon
p icing’s clima ic impac is de e mined by how ex ensi ely
he p ice is implemen ed, he p ice le el, and he a ailabili y
o aba emen possibili ies (The Wo ld Bank, 2022).
As o Ap il 2022, he e a e 68 ca bon p icing ins umen s
(CPIs) ope a ing wo ldwide. These a e ei he ca bon axes
o emissions ading sys ems (ETS). A ca bon ax is a policy
ool ha allows a go e nmen o cha ge a le y o emissions.
The o e all olume o emissions in one o mo e sec o s o
he economy is con olled o capped in an emissions ad-
ing scheme. The go e nmen hen sells o dis ibu es ad-
able emission pe mi s o en i ies subjec o he cap. Each
allowance e lec s he igh o elease a speci ic olume o
emissions, which is usually one me ic on o CO2-equi alen
( CO2e), and he o e all olume o allowances equals he
emissions cap. Du ing a compliance pe iod, o ganiza ions
mus su ende pe mi s o hei emissions. They can ei-
he pu chase ex a allowances as needed o sell su plus al-
lowances. This s a egy is also known as a "cap-and- ade"
scheme (Uni ed Na ions Commi ee o Expe s on In e na-
ional Coope a ion in Tax Ma e s: En i onmen al Tax Issues,
2020).
The g aph in Figu e 1depic s he global ca bon p ic-
ing sys ems in ope a ion as o 2022, whe eas ca bon p icing
schemes a e ega ded as "scheduled o implemen a ion" un-
il hey ha e been legally es ablished by law and ha e a clea
s a da e. Ca bon p icing e o s a e ca ego ized as "unde
conside a ion" i he go e nmen has p oclaimed i s in en ion
o wo k owa d implemen ing a ca bon p icing p og am and
his has been explici ly acknowledged by o icial go e nmen
sou ces.
The adop ion o ca bon p icing con inues g owing s eadily
in he Ame icas and Asia, bu he global co e age emains
low. Se e al ju isdic ions, such as B azil, Tu key o Tai-
wan con inue o assess he po en ial o implemen he CPIs.
Implemen ing ca bon p ices emains a policy challenge, es-
pecially gi en ising ene gy commodi y p ices coupled wi h
cu en geopoli ical issues and he ongoing COVID-19 pan-
demic’s impac on economies. The Eu opean Commission
es ima es he p opo ion o global emissions co e ed by he
CPIs in ope a ion o be app oxima ely 23% (Join Resea ch
Cen e (Eu opean Commission), 2022).
The la ges ca bon ma ke , by aded alue, is he Eu o-
pean Emissions T ading Sys em (EU ETS). I was launched in
2005 as a majo pilla o he Eu opean ene gy policy and was
quickly ollowed by coun e pa s in New Zealand (NZ ETS),
Sou h Ko ea, Cali o nia and he RGGI. The Regional G een-
house Gas Ini ia i e is abb e ia ed as RGGI1. O e he pas
yea s, ca bon p ices ha e eached eco d highs, as shown in
Figu e 2.
Following a combina ion o policy decisions, inc eased
specula ion, and b oade economic ends - pa icula ly
global ene gy p ices – i is ai o conclude ha ca bon p ices
eac o ma ke condi ions. The spikes in he di e en ETS
p ices ha e been d i en by mo e ambi ious clima e a ge s
and e o ms.
Ge many, he EU ETS’s la ges emi e , success ully de-
ployed i s domes ic ene gy ETS on Janua y 1, 2021, a a ixed
1The Regional G eenhouse Gas Ini ia i e (RGGI) is a coope a i e, ma ke -
based e o among he US s a es o Connec icu , Delawa e, Maine, Ma y-
land, Massachuse s, New Hampshi e, New Je sey, New Yo k, Pennsyl a-
nia, Rhode Island, Ve mon , and Vi ginia.
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931966
Figu e 1: Map o ca bon axes and emission ading sys ems ope a ing wo ldwide as o Ap il 2022 (The Wo ld Bank, 2022)
Figu e 2: P ice e olu ion in selec ed ETS, 2008-2021 (In e na ional Ca bon Ac ion Pa ne ship, 2022)
ee o 25 eu os pe onne CO2equi alen , wi h he sale o
Na ional Emissions T ading Scheme (nEHS) pe mi s begin-
ning in Oc obe 2021. All ene gy emissions ha ha e no
been egula ed by he EU ETS (p ima ily hea ing and ans-
po anspo a ion) ha e been included. Such emissions a e
eleased by a ange o sou ces, including hea ing, oil, na u al
gas, pe ol, and diesel. Some uels (such as coal and ga bage)
will be phased in la e in 2023. F om 2021 o 2025, he nEHS
will be b ough in p og essi ely, wi h a se p ice on emission
allowances. The se p ice will con inue o climb o e ime.
A e ha , allowance p icing will be de e mined by he ma -
ke beginning in 2027. The cap on he emissions is based
on Ge many’s mi iga ion goals o indus ies no co e ed by
he EU ETS (Bundesminis e ium de Jus iz, 2021; The Wo ld
Bank, 2022).
Ge many’s domes ic ETS and he EU ETS mi o a eali y
ha all CPIs sha e, namely ha i s p ices emain below wha
is equi ed o mee he Pa is Ag eemen ’s goals. Acco ding
o he High-Le el Commission on Ca bon P ices, CPIs should
ange be ween 70-100 €/ CO2e o keep global wa ming o
below 2◦C by 2030 (S igli z & S e n, 2017). Newe es ima es
indica e ha e en highe p ices may be needed o educe
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1967
emissions o ne ze o by 2050, as equi ed by he IPCC o
each he 1.5◦C a ge . A poll o 30 en i onmen al analys s
conduc ed in 2021 es ima es ha p ices anging om 70 o
250 USD pe CO2e would be equi ed o mee his objec i e,
wi h an a e age es ima e o 100 USD pe CO2e (Bha , 2022).
The cu en s a e o ca bon p icing wo ldwide e lec s he
gap be ween policy and commi men s epo ed by he IEA.
In mos coun ies, highe ca bon p icing and a u he se o
complemen a y policy ac ions will be equi ed o mee bo h
sho - e m mi iga ion a ge s and long- e m ne ze o policies.
This is especially ue o p omo ing deca boniza ion in com-
plex, ene gy-in ensi e sec o s, whe e low-ca bon echnolo-
gies a e unde de eloped (IEA, 2022b).
2.2. Ca bon Leakage and he Ca bon Bo de Adjus men
Mechanism (CBAM)
As go e nmen s expand hei ca bon p icing aspi a ions,
ca bon leakage becomes a g owing conce n. Ca bon leakage
e e s o he possibili y ha educed emissions in one s a e
will be e e sed by highe emissions in ano he . This migh
be caused by inc eased ou pu o eloca ion o a s a e wi h
less igo ous emission egula ions. Ca bon leakage holds he
po en ial o ha m GDP, jobs, and ax e enue in he mos au-
dacious s a es, c ea ing a de e en o ac . I also dec eases
he e ec i eness o en i onmen al legisla ion by eloca ing
emissions o coun ies wi h poo ly en o ced egula ions, po-
en ially leading o an inc ease in global ca bon emissions
(Aichele & Felbe may , 2015).
To da e, he e is li le empi ical e idence o ca bon leak-
age. An econome ic in es iga ion o ca bon leakage caused
by he EU Emission T ading Scheme (ETS) on he cemen
and i on and s eel sec o s disco e ed no indica ion ha he
EU ETS has had any impac on ne impo s in hese ene gy-
in ensi e indus ies, a guing ha so a , mos ju isdic ions
ha e esponded o leakage conce ns by g an ing exemp ions,
e unds, o ee alloca ion o allowances o sensi i e sec o s.
These app oaches ha e down alls, howe e . Dec easing he
ca bon p ice weakens he mo i a ion o use esou ces mo e
e icien ly o he swi ch o lowe -ca bon echnologies and
p oduc s (Che allie e al., 2017; Eu opean Pa liamen and
Eu opean Council, 2003; Felbe may , 2020).
Acco ding o he OECD, o e all ca bon emissions embod-
ied in in e na ional ade ha e inc eased by abou 50% be-
ween 1995 and 2018. China, he Uni ed S a es, India, he
Russian Fede a ion, Japan, and Ge many we e he six g ea -
es p oduce s and consume s o ca bon emissions in 2018, as
shown in he Figu e 3.
While emissions p oduc ion and consump ion ha e de-
c eased in Japan, Ge many, and he Eu opean Union (EU27)
since 1995, he e has been a la ge g ow h in China and In-
dia. China has he bigges absolu e emissions, bo h in e ms
o consump ion and p oduc ion. While he OECD coun ies
shown (Uni ed S a es, Japan, and Ge many), in o al, a e
ne -impo e s o embodied ca bon, he non-OECD coun ies
shown (China, India and he Russian Fede a ion) a e ne -
expo e s o embodied ca bon emissions.
Nume ous coun ies a e examining ade measu es o
mi iga e any possible ca bon leakage caused by ca bon p ic-
ing. One o hose measu es, p oposed in academic and pol-
icy li e a u e, is Bo de Ca bon Adjus men s (BCAs). BCAs
add ess such wo ies abou ca bon leakage by employing
ade mechanisms o gua an ee ha p oduc s om o e seas
manu ac u e s acing lowe (o no) ca bon cos s a e ea ed
equally wi h domes ically p oduced commodi ies. Despi e
i s in ui i e economic appeal, BCAs pose di icul egula o y
decisions, including i s scope o applicabili y (i.e., which
policies, goods, sec o s and coun ies), he me hodology o
assessing he ca bon con en o p oduc s, he ype and p ice
o he adjus men , and how he esul ing e enues will be
used. Any BCA mus be designed in acco dance wi h in e -
na ional acco ds con olling ade and clima e policy du ies
(Cosbey e al., 2019; Ho n & Ma oidis, 2011).
BCAs gene a e impo an ques ions abou he accoun -
abili y o clima e ac ion. Indeed, he p inciple ha coun ies
ha e a common bu di e en ia ed esponsibili y o ackle cli-
ma e change, has long been oo ed in global clima e coop-
e a ion. De eloping coun ies claim ha weal hie coun ies
ha implemen BCAs a ec ade by unila e ally imposing
ca bon p icing on manu ac u ed goods. On he o he hand,
he e a e calls o indus ialized na ions o accep esponsi-
bili y o hei consump ion’s ca bon oo p in , which a BCA
would help o achie e (Ranjan Mish a, 2021; Uni ed Na ions
Con e ence on T ade and De elopmen (UNCTAD), 2021).
The Eu opean Commission eleased i s p oposal o he
CBAM in July 2021 and eached an ag eemen a e e ising
i in Decembe 2022. The CBAM is pa o he EU’s ac ion
plan, “Fi o 55”, which seeks o educe Eu opean emissions
by a leas 55% by 2030 and achie e ne ze o emissions by
2050 while ensu ing compe i i e s eng h and a oiding ca -
bon leakage. As p e iously men ioned, he CBAM basically
in ol es imposing a ca bon p ice o impo s o speci ic p od-
uc s in o he Eu opean Union–, p opo iona e o he i ems’
"embodied emissions," o he emissions o g eenhouse gases
c ea ed du ing hei manu ac u ing, as pe d a egula ions
issued in July 2021. Acco ding o A icle 21 o he CBAM
egula ion p oposal, impo e s o included goods will be ob-
liga ed o acqui e emission ce i ica es in ela ion o hei
embodied emissions. The p ice o such ce i ica e would be
equal o he p ice o EU ETS allowances. CBAM will ini ially
co e se e al speci ic goods om some o he mos ca bon-
in ensi e sec o s, comp ising i on and s eel, cemen , e ilis-
e s, aluminum, elec ici y, and hyd ogen, as well as some
p ecu so s and a small selec ion o downs eam p oduc s, ac-
co ding o he i s Annex o he egula ion. CBAM will begin
ope a ions in Oc obe 2023, and ini ially, a simple CBAM be-
ween 2023 and 2025 will apply o epo ing obliga ions. The
CBAM is designed o p og essi ely eplace he exis ing ee
alloca ion o pe mi s as he p ima y mechanism unde he EU
ETS o add ess ca bon leakage. The me hod will be phased
in p opo ionally o he phase-ou o he p esen ee alloca-
ion, acco ding o A icle 31 o he p oposed CBAM d a . Im-
po e s o such goods can minimize o a leas lessen p ospec-
i e CBAM expenses. Acco ding o A icle 9 o he CBAM
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931968
Figu e 3: P oduc ion and consump ion o embodied emissions in in e na ional ade pe coun y, 1995 s. 2018
(O ganisa ion o Economic Co-ope a ion and De elopmen , 2021)
egula ion p oposal, goods ha a e subjec o a di ec ca bon
p ice (i.e. a ca bon ax o ETS) in hei coun y o o igin a e
eligible o a eba e equal o he p ice al eady paid p io o
expo . In ha way, acco ding o EU egula ing bodies, he
CBAM will ensu e a balanced ea men o such impo s and
i will encou age ading pa ne s a ound he wo ld o join
he EU’s clima e e o s (Eu opean Commission, 2021; Eu o-
pean Council, 2021; Pausch-Homblé, 2022).
Recen s udies add essing CBAM ou comes sugges ha ,
i implemen ed widely, i will educe g eenhouse emissions,
hus being bene icial in e ms o dec easing global wa m-
ing (Balis e i e al., 2019; Cle c e al., 2021; Eugs e , 2021;
Kahn e al., 2019). On he o he hand, legal challenges and
ade con lic s a e o be expec ed. The CBAM’s compliance
wi h he ade laws o he Gene al Ag eemen on Ta i s and
T ade (GATT) is no secu ed. Con a y o he EU’s jus i i-
ca ion, he in e na ional communi y pe cei es CBAM as a
signi ican ba ie o ade camou laged as a mi iga ion pol-
icy, claiming ha he CBAM also iola es he ade p inciples
o he Wo ld T ading O ganiza ion (WTO). The CBAM may
boos p ices o goods, causing pe haps ano he ade dis up-
ion and a ec ing de eloping coun ies (Appunn & We en-
gel, 2023; Dias e al., 2021; Gläse e al., 2021; Lim e al.,
2021; Lowe, 2021; Sapi , 2021).
Al hough some lawmake s ha e ad oca ed o CBAM ex-
emp ions in leas de eloped coun ies, o he s a gue ha do-
ing so would dec ease he e ec i eness o he mechanism.
The e is an al e na i e app oach o os e ing equi y by using
CBAM e enues o p o ide low-ca bon de elopmen assis-
ance o de eloping coun ies. While he ini ial EU p oposal
in ol ed alloca ing he e enue o he EU budge , lawmake s
ag eed ha he e enue will be edi ec ed o leas de eloped
coun ies o o se he cos s ha he mechanism imposes on
hem, acco ding o A icle 24a o he upda ed CBAM p oposal
om Decembe 2022 (Go e, 2021; Inci , 2022).
In July 2021, a su ey o majo Ge man s akeholde s in-
cluding businesses, ci il ins i u ions, and esea ch e ealed
ha he e is conside able suppo o CBAM and an an icipa-
ion ha he mechanism will be e en ually implemen ed. In-
dus y s akeholde s suppo ed con inuing he ee alloca ion
o allowances, e unds o EU expo e s and using p o i s o
domes ic spending. Meanwhile, ci il ins i u ions a he a o
phasing ou ee alloca ion, exemp ing low-income coun ies
and coun ies wi hou clima e policies, and using e enues o
und he g een ansi ion in low-income coun ies (Kuehne
e al., 2022).
Figu e 3, which depic s he p oduc ion and consump-
ion o embodied ca bon emissions in in e na ional ade by
coun y, p esen s China, he Uni ed S a es. Russia, Japan
and India as he coun ies wi h he highes amoun s o p o-
duced and consumed emissions. These coun ies a e highly
likely o ha e la ge p oduc ion indus ies in ene gy-in ensi e
p oduc ion sec o s, which a e a ge ed by CBAM. I can be
deduced, he e o e, ha such coun ies may play a signi i-
can ole as op ading pa ne s o Ge many’s impo s o
CBAM goods, as hei p oduc s a e in high demand globally
(Wo ld T ade O ganiza ion, 2022). China, o example, is he
wo ld’s la ges p oduce o s eel and aluminum, and i also
has an eno mous capaci y o chemical and polyme manu-
ac u ing. Simila ly, he Uni ed S a es is he wo ld’s g ea es
p oduce o na u al gas and a subs an ial manu ac u e o
aluminum and s eel, while Japan has a conside able capaci y
o high-quali y s eel and chemicals. India is also becoming
a signi ican p oduce o i on and s eel, chemicals, and poly-
me s (In e na ional Aluminum Ins i u e, 2023; Japan Ex e -
nal T ade O ganiza ion - JETRO, 2022; U.S. Ene gy In o ma-
ion Adminis a ion, 2022; Wo ld S eel Associa ion, 2023).
2.3. CO2emissions embodied in CBAM goods
The e is a u he issue ha has no been b ough unde
he spo ligh ye . The CBAM equi es he de elopmen o
me hodologies o es ima e he emissions embodied in goods.
Impo e s o CBAM goods will be obliga ed o acqui e emis-
sion ce i ica es in ela ion o hei embodied emissions. Ac-
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1969
co ding o he CBAM p oposal, embodied emissions o goods
may be based on eal emissions epo ed and alida ed by ac-
c edi ed e i ie s o using de aul alues, whe e impo e s a e
unable o demons a e ac ual emissions. The use o de aul
alues may be p oblema ic, as he e a e di e en app oaches
o de e mine such alues. The ollowing chap e discusses in
de ail his issue (Eu opean Commission, 2021).
Acco ding o A icle 7 o he CBAM, embodied emissions
in goods shall be calcula ed pu suan o he me hods se ou
in i s hi d Annex. The hi d Annex s ipula es ha embodied
emissions o goods a e o be based on eal emissions o using
de aul alues. I eal moni o ing alues o emissions canno
be supplied, a de aul alue is used. The hi d Annex u he
de e mines ha “only eal alues om he coun y whe e ac-
ual emissions occu ed mus be used as de aul alues. In
he absence o ac ual, coun y speci ic alues, li e a u e al-
ues may be used. Li e a u e alues shall be de e mined based
on he bes a ailable da a” (Eu opean Commission, 2021).
De aul alues, whe he coun y speci ic o aken om li -
e a u e, can be delibe a ely se lowe han he likely embod-
ied emissions. Expo e s o goods could hen bene i om he
ailu e o p o ide eliable da a on ac ual emissions, using de-
aul alues and a oiding a majo inancial bu den. The EU
a gues ha “de aul alues shall be se a he a e age emis-
sion in ensi y o he 10% wo s pe o ming ins alla ions in
each expo ing coun y and o each o he goods lis ed in
Annex I o he han elec ici y, inc eased by a ma k-up, he la -
e o be de e mined in he implemen ing ac s [o he CBAM].
When eliable da a o he expo ing coun y canno be ap-
plied o a ype o goods, he de aul alues shall be based on
he a e age emission in ensi y o he 5 % wo s pe o ming
EU ins alla ions o ha ype o good” (Eu opean Commis-
sion, 2021).
To he g ea es deg ee p ac icable, “bes a ailable da a”
used o de aul alues should be based on accu a e and pub-
licly accessible in o ma ion on he ype o echnology and
me hods u ilized, ene gy sou ce, and inpu ma e ials. I is
u he de e mined in he hi d Annex ha “de aul alues
shall be upda ed on a egula basis, depending on he mos
ecen and us wo hy in o ma ion. The EU also p omises
o “publish [addi ional]guidance o he app oach aken o
adjus o g eenhouse gases used as p ocess inpu ”. In he
upda ed e sion o he CBAM i is clea ly s a ed ha “unde
no ci cums ances shall de aul alues be lowe han he likely
embodied emissions and he expo e shall no bene i om
he ailu e o p o ide eliable da a on ac ual emissions so ha
de aul alues a e used”. Al hough he calcula ion o embod-
ied emissions seems accu a e a i s sigh , he hi d Annex o
he CBAM is, un il his poin in ime, aguely o mula ed. The
exac me hodology o calcula e embodied emissions based
on ac ual da a o a ailable li e a u e s ill mus be de eloped.
(Ca bon Ma ke Wa ch, 2021).
3. Me hodology
3.1. Ou line
The esea ch app oach o his hesis employs a quan i a-
i e esea ch me hod, as he embodied emissions o goods
can be measu ed. The s udy elies p ima ily on seconda y
da a, u ilizing exis ing quan i a i e da a a he han collec -
ing new in o ma ion. Howe e , o iginal quan i a i e da a is
gene a ed h ough he analysis o seconda y sou ces, includ-
ing legal ex s and p ess eleases ela ed o he Ca bon Bo de
Adjus men Mechanism (CBAM). All da a used in he s udy
is publicly accessible and ex e nal o he esea ch p ojec .
This hesis builds a model, on an Excel basis, o de e -
mine o wha ex en CBAM will impac he ading pa e ns
o expo s and impo s be ween Ge many and non-Eu opean
coun ies. I seeks o de e mine i he inancial bu den o
CBAM is une enly dis ibu ed ac oss expo e s and de e -
mined by each coun y’s ene gy p oduc ion s uc u e. To do
so, he esea ch is subdi ided in o indi idual esea ch s eps,
shown in Figu e 4.
The esea ch commences by examining he EU’s Ca -
bon Bo de Adjus men Mechanism (CBAM) o es ablish he
model’s bounda y condi ions. The objec i e is o quan i a-
i ely eplica e he legisla i e amewo k, ensu ing ha all
calcula ions adhe e o he speci ied egula ions (see 2.3).
Subsequen ly, conside ing he CBAM ules and bounda y
condi ions, ade s a is ics om he Ge man Fede al S a is-
ical O ice a e u ilized o de e mine he aded alue, ol-
ume, and ading pa ne s associa ed wi h CBAM goods (see
3.3.1). The nex s ep consis s in calcula ing he embodied
emissions using he p e ious s ep and da a om he OECD
on in ensi y o emissions (see 3.3.2).
The esul s om he hi d s ep a e hen compa ed in he
ou h s ep o he esea ch, by using da a om he IEA and
he USGS on he me al indus y (see 3.3.3). All da a is hen
alida ed wi h li e a u e alues and alues om exis ing cal-
cula ion models, such as he GHG P o ocol Tool in he ol-
lowing s ep (see 3.3.4).
The las s ep o he esea ch analyzes he po en ial impac
o he p oposed CBAM on Ge many’s demand o ene gy-
in ensi e goods, such as me als, as well as he impac on i s
majo ading pa ne s (see 3.3.5).
3.2. Da a collec ion
3.2.1. T ade s a is ics
The In e na ional Mone a y Fund’s Dissemina ion S an-
da ds Bulle in Boa d (DSBB) allows use s o access online
da ase s o all a ailable ca ego ies o a coun y, e en i
compiled by mul iple s a is ical agencies. The DSBB com-
p ises da a o Ge many h oughou he di e en sec o s o
i s economy, such as he inancial, he iscal and he ex e nal
sec o . The la e one desc ibes he ea u es ela ed o he
economic in e ac ion wi h o he coun ies, such as balance
o paymen s, ex e nal deb , and me chandise ade (In e na-
ional Mone a y Fund, 2015).
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931970
Figu e 4: Resea ch s eps (abo e) and used da a sou ces (below) in each s ep (Own illus a ion, 2023)
S a is ics in Ge many abou me chandise ade a e col-
lec ed by he Fede al S a is ical O ice. The goal o me chan-
dise ade s a is ics is o ack he mo emen o goods ac oss
bo de s be ween Ge many and o he na ions. Since 1993,
Ge man me chandise ade da a has been di ided in o wo
ca ego ies, Ex a- and In a-EU ade s a is ics. The quan i-
ies and alues o impo ed and expo ed commodi ies a e
published p ima ily b oken down by commodi y ypes and
coun ies.
The classi ica ion o commodi ies used o epo ing im-
po s and expo s is he Eu opean Cus oms nomencla u e,
published in Ge many as Wa en e zeichnis (WA) (Fede al
S a is ical O ice (DESTATIS), 2019). The i s Annex o
he CBAM speci ies exac ly which aded goods a e a ge ed
acco ding o i s nomencla u e, as seen in Table 1.
The Fede al S a is ical O ice p o ides da a on each im-
po ed good indi idually, acco ding o i s speci ic nomencla-
u e. As de e mined in he i s Annex o he CBAM, he e
a e (ini ially) 104 goods included in he CBAM. The da a on
impo s is p esen ed as a mone a y alue, in acco dance wi h
in e na ional s anda ds. The alue o each good is based on
i s en y alue a he Ge man bo de . Gene ally, i is de i ed
om he in oice alue wi h some adjus men s o anspo
cos s. Ta i s and axes o o he cha ges which ha e been
le ied on impo o expo a e no included in he s a is ical
alue. The yea ly cumula ed sum o impo s, in housand
eu os (T€), is p o ided o each coun y. Addi ionally, he
yea ly cumula ed weigh sum o each good is also p o ided
in ons.
3.2.2. OECD TECO2da abase
The O ganiza ion o Economic Coope a ion and De el-
opmen (OECD) is known as a s a is ical agency ha com-
pa es policy expe iences and coo dina es domes ic and in-
e na ional policies. Since 2014, he OECD publicly eleases
i s main s a is ical da abases on subjec s such as ag icul u e,
popula ion, and economic p ojec ions om indus y and se -
ices. The S uc u al Analysis (STAN) da abase o e s in-
sigh s on indus ial pe o mance ac oss na ions. I comp ises
yea ly measu emen s o p oduc ion, labo inpu , and in es -
men .
In he amewo k o his esea ch, he Inpu -Ou pu Ta-
bles (IOTs) o he STAN da abase p o ide help ul in o ma-
ion. IOTs explain he sell and pu chase in e ac ions ha
exis wi hin an economy be ween p oduce s and consume s
and show lows (sales and pu chases) o inal and in e me-
dia e commodi ies and se ices (O ganisa ion o Economic
Co-ope a ion and De elopmen , 2018).
Mo e ecen ly, he OECD me ged he 2021 e sion o
he In e -Coun y Inpu -Ou pu (ICIO) ables wi h he IEA’s
s a is ics on ca bon emissions om uel combus ion o es i-
ma e he dis ibu ion ac oss economies o inal demand o
embodied ca bon ha has been emi ed along global p o-
duc ion chains. Using in o ma ion om bo h da abases, he
emission in ensi y o p oduc ion is calcula ed o each in-
dus y in each coun y. In ha way, he T ade in Embodied
CO2(TECO2) da abase p esen s a se o indica o s o iden-
i y pa e ns o ca bon demand and ca bon p oduc ion in
each na ion. The da abase includes indica o s such as ca -
bon emissions based on p oduc ion (emi ed by coun ies),
emissions embodied in domes ic inal demand (consumed by
coun ies), ne expo s o ca bon emissions and he coun y
o igin o emissions in inal demand. Policymake s, such as
he EU, p o i om such insigh s in o he en i onmen al im-
plica ions o global indus ial sys ems. The impac o in e -
na ional ade can be measu ed by alloca ing emissions o
consuming and p oducing na ions, hus disclosing whe he
na ions a e lowe ing o g owing hei emissions in p oduc-
ion and consump ion p ocesses (Yamano & Guilho o, 2020).
3.2.3. IEA Wo ld Ene gy S a is ics and Balances
The IEA compiles da a on ene gy commodi ies such as
oil, na u al gas, and coal o publish yea ly in o ma ion books
on speci ic uels. Such commodi y balances a e p esen ed
in a simple way, by p esen ing all he da a in compa able
physical uni s. This could be joules o cubic me e s o na -
u al gas o ons o coal, o example. Ye such commodi-
ies a e consumed o hei ene gy con en and can be ans-
o med in o one ano he h ough di e en p ocesses. Simple
commodi y balances mus be in eg a ed o c ea e an o e -
all iew o he ene gy sys em. Ene gy balances ul ill his
ask by showing how one p oduc is u ned in o ano he .
Such balances highligh he many links be ween ene gy com-
modi ies and demons a e how all sou ces o ene gy a e con-
sumed (Má quez Albe o & Villa o o Flo es, 2022; Milla d &
Quad elli, 2017).
In an ene gy balance, da a elemen s on di e en com-
modi ies appea in a common physical uni . I enables, in he
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1971
Table 1: S a is ical nomencla u e o CBAM goods (Fede al S a is ical O ice (DESTATIS), 2019)
CBAM good ca ego y and abb e ia ion S a is ical nomencla u e (Wa en e zeichnis)
A: Aluminum WA76xx
C: Cemen WA2523xx
CH: Chemicals WA29xx; WA280410 and WA2814xx
E: Elec ici y WA271600
F: Fe ilise s WA3105xx
IS: I on and S eel WA72xx and WA73xx
P: Polyme s WA39xx
amewo k o his esea ch, o see he o al amoun o ene gy
consumed and he ela i e con ibu ion o each sou ce o he
economy as a whole and o each sec o o consump ion. I
also allows o he de e mina ion o ene gy ans o ma ion e -
iciencies, he de elopmen o agg ega e indica o s, and he
o ecas ing o ca bon emissions om uel combus ion (EU-
ROSTAT, 2018). An ene gy balance may also be used o isu-
alize he ene gy sys em using Sankey cha s. The key da a o
an ene gy balance is he To al P ima y Ene gy Supply (TPES),
he To al Final Consump ion (TFC) and he elec ici y gene -
a ion by uel ype. The TPES measu es he o al supply o
ene gy a ailable o use in a coun y, while he TFC shows
he ene gy ha is used by inal consume s, namely he en-
e gy used in households, anspo , and businesses. Da a on
elec ici y p oduc ion e lec s he ela i e impo ance o each
ene gy sou ce in he gene a ion mix. In he TFC, he p oduc
“elec ici y” comp ises elec ici y gene a ed om all ene gy
sou ces, bu in he TPES, jus he app op ia e p ima y equi -
alen quan i y o each gene a ion sou ce is included (EURO-
STAT, 2020).
Indus y, anspo , and he o he sec o s (mainly esiden-
ial) a e ed by ene gy sou ces such as oil and oil p oduc s,
coal, na u al gas, elec ici y, and bio uels. Oil and oil p od-
uc s a e he majo sou ce o ene gy consumed, p ima ily in
he anspo sec o , amoun ing o oughly 40% o he TFC.
The indus y sec o , wo ldwide, consumes ene gy mainly in
o m o coal, na u al gas and elec ici y. The ob ained in o -
ma ion om he IEA will be u he used o es ima e he em-
bodied emissions o goods, o each coun y, based on hei
TFC.
3.3. Resea ch me hods
3.3.1. CBAM goods aded o Ge many and ading pa ne s
De e mining he ading quan i ies and op ading pa -
ne s o CBAM goods is o ele ance in unde s anding he
embodied emissions o he impo s. P oduc ion o he same
good in di e en coun ies can ha e as ly di e en ca bon
oo p in s due o di e ences in ene gy gene a ion ma ix,
p oduc ion p ocesses, and egula ions. By iden i ying ade
na ions and quan i ies, he embodied emissions o i ems may
be calcula ed mo e easily. Fu he mo e, iden i ying he op
ading pa ne s can guide Ge many in s a egizing i s ade
policies and p omo ing sus ainable ade p ac ices. The go -
e nmen may collabo a e wi h i s ade pa ne s o minimize
ca bon emissions om goods p oduc ion and os e a mo e
sus ainable global economy.
Addi ionally, A icle 9 o he CBAM speci ies ha a educ-
ion in he numbe o CBAM ce i ica es will be su ende ed i
he ca bon p ice paid in he coun y o o igin o he decla ed
goods is conside ed. This means ha impo e s can lowe
hei CBAM liabili y by p o iding e idence o he ca bon p ice
paid in he coun y o o igin. To calcula e he educ ion in he
numbe o CBAM ce i ica es o be su ende ed, a me hodol-
ogy is equi ed, which includes he con e sion o he ca bon
p ice paid in o eign cu ency in o Eu os a he yea ly a e -
age exchange a e. The e o e, knowing he coun y o o igin
and he ca bon p icing policies in hose coun ies is c i ical o
accu a ely calcula e he CBAM ce i ica es and o implemen
he CBAM e ec i ely.
The i s s ep o he analysis consis s in gene a ing a ma-
ix ha comp ises all CBAM goods impo ed and all he
expo ing coun ies. The Ge man Fede al S a is ical O ice,
in compliance wi h he Fede al Fo eign O ice, includes 262
coun ies, some o which a e no longe one coun y, such as
he So ie Union o Yugosla ia. Fu he mo e, he e a e coun-
ies lis ed as con iden ial o “no de e mined”. To accoun
o his, he analysis il e s ou all coun ies ha did no ex-
po e en a single uni o CBAM goods o Ge many du ing
he pe iod o 2012 o 2021.
Acco ding o he second Annex o he CBAM, he adjus -
men mechanism does no apply o he 28 coun y mem-
be s o he EU, including he ecen ly joined C oa ian Re-
public. Addi ionally, he egula ion does no apply o goods
o igina ing om Iceland, Liech ens ein, No way and Swi ze -
land. A e il e ing ou all i ele an coun ies he ma ix
comp ises 122 expo ing coun ies. The ma ix o expo ed
CBAM goods pe coun y uses he la es (2021) and he ea -
lies (2012) da a a ailable, o compa e he ecen de elop-
men o ade2.
The analysis con inues by b eaking down he CBAM
goods pe ading pa ne , conside ing he CPIs o he coun-
ies o o igin o he goods. The goal is o p io i ize he
de ailed calcula ion o embodied emissions o hose ad-
ing pa ne s wi h he highes inancial impac , based on he
aded alue and/o CPI.
2The e is no da a a ailable be o e 2012 o all he 122 coun ies lis ed in
his ma ix o all CBAM goods
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931978
Figu e 11: P incipal impo ed good pe g oup acco ding o i s impo ed alue, 2021 (Fede al S a is ical O ice (DESTATIS), 2022b)
s eel is a highly ad an ageous ma e ial o use in he con-
s uc ion indus y due o i s s eng h, du abili y, e sa ili y,
cos -e ec i eness, sus ainabili y, and i e- esis an p ope ies
(Wi scha s e einigung S ahl, 2021).
F om he g oup o polyme s, he dominan good impo ed
is plas ic in shee s and pla es. I accoun s o 16% o all im-
po s o polyme s and 5,2% o all CBAM goods. Acco ding
o he Fede al Cus oms Se ice, plas ic in shee s and pla es
is an o e all e m ha encompasses addi ionally ilm, oil
and s ip o un oamed plas ics, mos ly ou o polye hylene.
Polye hylene is ex ensi ely used in he packaging, cons uc-
ion, and au omo i e indus y. In he packaging sec o , i is
employed o p oduce bags, ilms, and con aine s o a ange
o p oduc s, including ood and be e age and medical sup-
plies. In cons uc ion, polye hylene is u ilized o pipes, wi e
and cable insula ion, and insula ion o buildings. In he au-
omo i e sec o , i is used o uel anks, hoses, and elec ical
componen s (A bei sgemeinscha Ve packung und Umwel ,
2022).
Ul ima ely, he op h ee g oup o p oduc s in CBAM im-
po s o Ge many in 2021 – polyme s, i on and s eel, and
aluminum – a e all c i ical ma e ials o sec o s such as pack-
aging, cons uc ion, and he au omo i e indus y. Because o
hei adap abili y, hese ma e ials a e app op ia e o a a i-
e y o applica ions in many a eas. Ge many’s huge manu ac-
u ing economy is s ongly elian on hese commodi ies, and
he coun y’s s ic en i onmen al s anda ds equi e he use
o high-quali y aw ma e ials.
In he con ex o emissions ading, i is impo an o no e
ha many speci ic emission in ensi y ac o s a e calcula ed
based on he p oduc ion o a ce ain numbe o ons o a
gi en p oduc . As a esul , when ading emissions, he ad-
ing olume in ons, in addi ion o he aded alue, becomes
an impo an indica o o con ey. Because he quan i y o
emissions eleased is di ec ly ela ed o he olume o a man-
u ac u ed p oduc , ading olumes in ons se e as a signi i-
can measu e o he o e all emissions p oduced by a ce ain
indus y o sec o . Bo h he aded alue and he ading ol-
ume in ons mus be conside ed, as hese wo me ics p o-
ide complemen a y in o ma ion ha , when combined, p o-
ides a mo e comple e pic u e o he emissions gene a ed. By
aking bo h elemen s in o accoun , i is easible o p ecisely
quan i y he en i onmen al impac . The g aph in Figu e 12
displays he aded quan i ies o CBAM goods in 2021 and
2012 (s iped) in M .
The da a p esen ed e eals ha he olume o aluminum
aded in ons inc eased by less han 10%, while he aded
alue inc eased by o e 40% in he las decade, sugges ing
a signi ican shi in he p icing dynamics o his commodi y
o e he pe iod unde conside a ion. Fu he mo e, he ol-
ume o s eel aded in ons inc eased by 10% o e he gi en
pe iod, while he aded alue inc eased by 35%, indica ing
a subs an ial ise in he p ice o s eel and i on. Acco ding
o he igu es shown in Figu e 12, he g ow h in aded alue
be ween 2012 and 2021 does no ollow a p opo iona e con-
nec ion wi h he inc ease in aded olume in ons. This dis-
pa i y aises he ques ion o how much goods’ p ices ha e
changed in he ecen decade, as a ise in aded alue does
no always imply an inc ease in he ac ual numbe o i ems
aded. Based on da a om he Fede al S a is ical O ice, he
g aph in Figu e 13 shows he p ice shi o he CBAM goods
om 2012 (s iped) o 2021 in Eu os pe on (€/ ).
The p ice o polyme s ose d as ically om 2012 o 2021
due o a ious ac o s such as inc easing demand, ising p o-
duc ion cos s, and luc ua ions in he p ice o aw ma e ials.
Addi ionally, supply chain dis up ions caused by na u al dis-
as e s and he COVID-19 pandemic also con ibu ed o he
ise in polyme p ices. The p ice o polye hylene, he mos
widely used polyme , ose by mo e han 150% om Janua y
2012 o Decembe 2021 due o he ac o s men ioned abo e
(Independen Commodi y In elligence Se ices, 2023) (In-
dependen Commodi y In elligence Se ices, 2023). Fu he
esea ch ou o he scope o his hesis is needed o iden i y
how p ice a ia ions ha e in luenced ade olumes and al-
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1979
Figu e 12: Impo o CBAM goods o Ge many, 2012 (s iped) s. 2021 (Fede al S a is ical O ice (DESTATIS), 2022b)
Figu e 13: P ice shi o CBAM goods, 2012 (s iped) s. 2021 (Fede al S a is ical O ice (DESTATIS), 2022b)
ues, and how hese ends may a ec he la ge economic
en i onmen in he u u e.
The op 15 coun ies ha expo ed he highes amoun
o CBAM goods o Ge many in e ms o aded alue in bil-
lion Eu os a e shown in Figu e 14, wi h da a compa ing he
yea s 2012 and 2021 ( o con as changes o expo s in one
decade). The coun ies lis ed expo ed, oge he , 89.4% o
all CBAM goods in 2021.
As expec ed, he i s coun y on he lis is China, ha
expo ed 4,5 B€wo h o CBAM goods o Ge many in 2021,
compa ed o 2,2 B€in 2012. This ep esen s an inc ease
o 104,5% in aded alue. China alone expo ed in 2021
almos a qua e (22,8%) o all CBAM goods o Ge many.
Second is he Uni ed S a es, ha expo ed 2,9 B€ o Ge many
in 2021, an inc ease o 38.1% in aded alue compa ed o
2012.
Thi d is he Uni ed Kingdom, which su p isingly educed
i s expo s o Ge many, dec easing 28.4% o i s aded alue.
I is possible ha he B exi e e endum in 2016 may ha e
nega i ely a ec ed he ade ela ionship be ween he Uni ed
Kingdom and Ge many. Unce ain y abou u u e ade
ag eemen s and egula ions may ha e led o a dec ease
in con idence and in es men , which could ha e impac ed
expo s. This, howe e , should be ully esea ched and is
only one o many possibili ies. Fou h on he lis is Russia,
which expo ed 1,8 B€ o Ge many in 2021, an inc ease
o 38,5%. Tu key closes he Top 5 expo e s, inc easing i s
aded alue by 114.3% in a decade. Roughly wo hi ds
o all CBAM goods impo ed o Ge many we e p oduced
by he Top 5 coun ies. Ul ima ely, he da a in he g aphic
sugges s ha he e has been a signi ican inc ease in aded
alue o CBAM goods om mos o he coun ies in he lis
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931980
be ween 2012 and 2021, wi h some coun ies expe iencing
mo e no able inc eases han o he s.
Figu e 14 is o g ea signi icance as i u he e eals a key
aspec o he CBAM. As pe he da a p o ided by he Wo ld
Bank in Figu e 1, some o he op ading pa ne s do no
ha e any o m o CPI, which pu s hem in a ulne able po-
si ion. These coun ies will bea he ull inancial bu den o
CBAM, acco ding o A icle 9, implying ha goods ha ha e
no paid any kind o ca bon ee in hei home coun y will
no ecei e any eba e o discoun , a cos ly a ai o hese
ading pa ne s. As a esul , big eme ging ma ke s such as
Russia o Tu key may su e mo e om he implemen a ion o
CBAM han coun ies like he UK o he Uni ed S a es. India,
Taiwan, and he A abian Peninsula will ace a highe bu den
due o he lack o a ca bon p icing sys em han Japan, Ko ea
o Sou h A ica. Howe e , i should be no ed ha his s a e-
men assumes ha all ading pa ne s ha e simila emissions
in ensi y o p oduc ion, which is no he case (see Chap e
4.2).
The Table 4shows he ading pa ne s ha ha e a ca -
bon p icing mechanism, indica ing he cu en p ice o one
uni and he eba ed p ice ce i ica e pe CBAM. The eba ed
p ice o he CBAM ce i ica e is calcula ed by sub ac ing he
domes ic p ice o each CPI om he cu en p ice o one emis-
sion ce i ica e in he EU ETS, acco ding o A icles 21 and 31
o he CBAM. The cu en p ice o a CBAM ce i ica e is se o
100 eu os pe on o CO2, based on da a om he Wo ld Bank
(The Wo ld Bank (IBRD and IDA), 2022). The selec ed coun-
ies o he analysis he ea e , acco ding o he me hodology
p esen ed in 3.3.1, a e highligh ed.
China and he Uni ed S a es a e pa icula ly selec ed o
u he analysis due o i s massi e ade alue wi h Ge many.
Al hough bo h coun ies al eady implemen ed a domes ic CPI
and ha e eba ed CBAM p ices, i is expec ed ha bo h coun-
ies ca y an addi ional inancial bu den om CBAM. G ea
B i ain is, in con as , no conside ed, as i s domes ic CPI has
equal p ices pe ce i ica e han hose assumed o CBAM.
Russia and Tu key a e in e es ing coun ies as bo h ha e nei-
he implemen ed no conside ed a domes ic CPI ( o he cu -
en s anding) and display a simila aded alue. Ko ea and
India a e also conside ed o compa e he impac o a domes ic
CPI, which Ko ea has and India no , on coun ies wi h simila
aded alue. The cha in Figu e 15 e eals he aded ol-
ume pe g oup o CBAM goods in 2021 o he ading pa ne s
conside ed.
China eme ges as he mos p ominen expo e o i on
and s eel and chemicals. The Uni ed S a es, simila ly o
China, expo he mos conside able sha e o polyme s and a
conside able sha e o chemicals. This may indica e di e en
ad an ages o disad an ages in he p oduc ion cos s s uc-
u e o each coun y, ha lead o highe cos s pe uni and
hus a lowe demand om Ge many. Meanwhile, Russia ap-
pea s o be he g ea es p oduce o aluminum and e ilis-
e s. Tu key compe es wi h Russia o he bigges sha e o
aluminum p oduc ion while Ko ea expo s mos ly polyme s
o Ge many. India expo s mos ly chemicals and i on and
s eel.
4.2. CO2emissions embodied in aded goods acco ding o
OECD TECO2
The cha in Figu e 16 compa es he esul s o he CO2
emissions embodied in he me al sec o pe expo ing coun y
o he yea 2021, depending on he in ensi y ac o o CO2
emissions used (see 3.3.2).
The cha clea ly shows ha China is he la ges p oduce
o emissions in he me als sec o , which is no su p ising gi en
he aded alue o i s i on, s eel and aluminum p oduc s and
he high in ensi y o i s emissions. In ac , China’s emissions
a e highe han any o he coun y included in he analysis.
Russia ollows behind as he second-la ges p oduce o emis-
sions in he me als sec o , wi h emissions le els e y simila
o China’s when compa ing he ac o [D24T25]. O e all, i is
no iceable ha he esul s o he analysis ollow a consis en
pa e n pe coun y, wi h he embodied emissions calcula ed
using he in ensi y o emissions o basic me als [D24]being
he highes , ollowed by [D24T25],[D25], and hen [DTO-
TAL].
The mos su p ising aspec o his cha is ha , excep o
China, he embodied emissions a e nea ly iden ical be ween
all coun ies based on bo h ac o s [D24T25]and [D24]. Pa -
icula ly in he cases o Russia and he Uni ed S a es he e-
sul s a e p ac ically indis inguishable. Howe e , he case o
China s ands ou , as i on and s eel emissions acco ding o
[D24]alone exceed all emissions based on [D24T25]. Fu -
he mo e, he o e all esul a ies by almos 2 M CO2e in he
case o China. The g aphs in Figu e 17 clea ly illus a es he
di e ence be ween China and all o he coun ies compa ed.
The Figu e 17 p o ides e idence ha in coun ies o he
han China and India, he a iables [D24T25; D24]and
[DTOTAL; D25]exhibi a consis en pa e n and a e app oxi-
ma ely equal. Howe e , in he case o China and India, hese
a iables ange wi hou any disce nible simila i y. I also
ein o ces he s a emen ha he CBAM will pose an une en
inancial bu den on expo e s, e idencing ha China, Russia
and India will ha e o bea he g ea e bu den as, o ex-
ample, a million USD wo h o i on and s eel expo ed will
gene a e wice o e en h ice as much emissions as he same
uni p oduced in he Uni ed S a es o Tu key. This, howe e ,
does no necessa ily imply ha demand and p oduc ion will
shi , as he indi idual s uc u es o he p oduc ion cos s mus
be conside ed as well. A million dolla s’ wo h o a p oduc
in a coun y does no au oma ically con ain he same p o-
duced olume han he same uni in ano he coun y. P ice
dynamics and p ice shi s, as men ioned abo e, play a signi -
ican ole. The in ensi y o emissions po ayed in Figu e 17
abo e mus be, he e o e, alida ed and compa ed wi h o he
me hods o calcula ing embodied emissions.
The cha in Figu e 18 compa es he esul s o he CO2
emissions embodied in chemicals, polyme s and e ilise s
pe expo ing coun y o he yea 2021, depending on he
in ensi y ac o o CO2emissions use. The cha shows ha
China is he la ges p oduce o emissions in his sec o as
well. China’s emissions a e again highe han any o he coun-
y included in he analysis. The Uni ed S a es ollows behind
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1981
Figu e 14: Top CBAM ading pa ne s o Ge many, 2021 s. 2012 (Fede al S a is ical O ice (DESTATIS), 2022b)
as he second-la ges p oduce o emissions. O e all, i is no-
iceable ha he esul s o he analysis ollow a consis en pa -
e n wi h smalle de ia ions pe coun y. The embodied emis-
sions calcula ed using he in ensi y o emissions o [D19T23]
a e o en he highes , ollowed by [D20],[D20T21], and
hen [DTOTAL]. In his cha , excep o China, he embod-
ied emissions a e in he same o de o magni ude be ween
all coun ies based on he ac o s [D19T23],[D20T21]and
[D20]. Russia is he only coun y signi ican ly a ec ed by
CBAM ega ding he expo o e ilise s.
All in all, he analysis e eals ha Russia, China and In-
dia ha e he la ges CO2emissions in ensi y, bu China is he
la ges pollu e pe million dolla s o p oduc s in he chemi-
cal and non-me allic mine al p oduc s ca ego y. The analysis
sugges s ha he CBAM will impose an une en inancial bu -
den on expo e s. The app oach used o calcula e embodied
emissions o expo ed goods in he me als sec o pe coun y
conside s speci ic ac o s o basic me al p oduc s and ab-
ica ed me al p oduc s. The esul s show ha China is he
la ges p oduce o emissions in he me als sec o , ollowed
by Russia, while o he coun ies ha e simila le els o em-
bodied emissions.
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931982
Table 4: Assumed eba ed CBAM ce i ica e p ices o each ading pa ne (The Wo ld Bank (IBRD and IDA), 2022)
T ading pa ne Name o he domes ic P ice o Domes ic CPI Hypo he ical eba ed
CPI CPI [€/ CO2e]CBAM ce i ica e p ice
[€/ CO2e]
CHN China na ional ETS 10 90
Uni ed S a es Cali o nia CaT 30 70
GBR: Uni ed Kingdom ETS 100 0
RUS and TUR Full CBAM ce i ica e p ice: 100
JPN Japan Ca bon Tax and Tokyo ETS 10 90
KOR Ko ea ETS 20 80
IND Full CBAM ce i ica e p ice: 100
TWN, UAE, SAU, ISR
and SRB
Full CBAM ce i ica e p ice: 100
ZAF Sou h A ica ca bon ax 10 90
UKR Uk aine ca bon ax 1,0 99
Figu e 15: Cumula i e aded alue o selec ed coun ies, s acked pe g oup o CBAM goods, 2021
(Fede al S a is ical O ice (DESTATIS), 2022b)
4.3. CO2emissions embodied in aded goods acco ding o
IEA
The g aph in Figu e 19 p esen s a compa ison o he
in ensi y ac o s o each coun y in he p oduc ion o i on
and s eel, as calcula ed h ough he me hod desc ibed in
3.3.3. Addi ionally, he in ensi y ac o s om he OECD
TECO2da abase wi h he ac o s [DTOTAL]and [D24T25]
a e shown o alida e he esul s om chap e 4.2.
The analysis e eals a no able dispa i y be ween he wo
calcula ion me hods. On one hand, he [OECD D24T25]
me hod shows a con adic o y end compa ed o he in ensi-
ies ob ained using [IEA PECM]and [IEA PECMBP]. I implies
ha China has he highes emission in ensi y pe on o i on
and s eel, while he [IEA PECM]and [IEA PECMBP] esul s
sugges i has he lowes in ensi y among all coun ies. A
i s glance, his seems implausible. Howe e , i could be due
o he as olume o p oduc ion in China, o he e migh be
inconsis encies in he p ima y ene gy inpu da a p o ided o
he IEA. Such specula ion will no be explo ed u he in his
s udy. Fo India only, he esul s om bo h me hods oughly
coincide, indica ing ha he emission in ensi y o i on and
s eel p oduc ion in India alls be ween 3,5 and 4,5 ons o
CO2pe on o i on and s eel p oduced. As o he Uni ed
S a es, i emains unclea which ac o be e ep esen s he
p oduc ion eali y. The case o Russia is su p ising, as he
[OECD D24T25] ac o is below he es ima ed in ensi ies ac-
co ding o [IEA PECM]and [IEA PECMBP]. I is also e iden
ha he emission ac o o elec ici y pe coun y plays a ole
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1983
Figu e 16: Embodied CO2emissions in he impo ed goods o i on, s eel and aluminum depending on he ac o used, 2021
(O ganisa ion o Economic Co-ope a ion and De elopmen , 2021)
Figu e 17: Compa ison o he in ensi y ac o s o CO2emissions embodied in he me als sec o , 2018
(O ganisa ion o Economic Co-ope a ion and De elopmen , 2021)
in he in ensi y ac o s o CO2emissions o i on and s eel.
This implies ha i he elec ici y emission ac o is wice as
pollu ing as o iginally de e mined, he in ensi y o i on and
s eel will be oughly hal a on o emissions highe pe on
p oduced ac oss all coun ies.
4.4. Valida ion wi h GHG P o ocol Tool and li e a u e alues
The p ima y objec i e o his s ep is o iden i y he pos-
sible easons o he de ia ion in he esul s. One hypo he-
sis is ha he uel emission ac o s o each p ima y ene gy
sou ce, such as coal and na u al gas, a e inco ec . Howe e ,
he esul s displayed in he g aph in Figu e 20 con adic his
hypo hesis.
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931984
Figu e 18: Embodied CO2emissions in he impo ed goods o chemicals, polyme s and e ilise s depending on he ac o , 2021
(O ganisa ion o Economic Co-ope a ion and De elopmen , 2021)
Figu e 19: Compa ison o in ensi y o CO2emissions ac o s o s eel depending on he da a sou ce and me hod o calcula ion, 2018
(BP, 2022; IEA, 2023; O ganisa ion o Economic Co-ope a ion and De elopmen , 2021; U.S. Geological Su ey, 2019b)
Figu e 20 sugges s ha he uel emission ac o s assumed
o each p ima y ene gy sou ce a e in a simila ange o al-
ues, unde mining he e o e he possibili y o low in ensi y
CO2emission ac o s o i on and s eel.
The nex phase in ol es compa ing he ou comes o his
s udy wi h he cu en li e a u e on CO2emission p oduc ion
in he i on and s eel sec o . The aim is o in es iga e he
hypo hesis ha he en i e assump ions and app oach adop ed
a e lawed in p inciple, and ha he CO2emission in ensi y
ac o s in he i on and s eel indus y may di e signi ican ly.
The esul s a e shown in he cha in Figu e 21 and compa ed.
The analysis shows ha he in ensi ies calcula ed a e
plausible and aises he ques ion o how he ac o [OECD
D24T25]is highe han all o he calcula ion me hods. This
will be u he discussed in chap e 5.2. I is clea , howe e ,
ha he in ensi ies es ima ed o China acco ding o [IEA
PECM]and [IEA PECMBP]a e oo low and ha a ai alue
o u he esea ch is he alue [EU JRC]. S ill, he analysis
sugges s ha China has he lowes in ensi y ac o o CO2
emissions o he majo ading pa ne s, ollowed by Uni ed
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1985
Figu e 20: Compa ison o in ensi y o CO2emissions ac o s o s eel depending on he da a sou ce and me hod o calcula ion, 2018
(BP, 2019; GHG P o ocol & Gillenwa e , 2005; IEA, 2023; O ganisa ion o Economic Co-ope a ion and De elopmen , 2021; U.S.
Geological Su ey, 2019b)
Figu e 21: Compa ison o in ensi y o CO2emissions ac o s o s eel depending on he da a sou ce and me hod o calcula ion, 2018
(BP, 2019; GHG P o ocol & Gillenwa e , 2005; IEA, 2023; Koolen & Vido ic, 2022; O ganisa ion o Economic Co-ope a ion and
De elopmen , 2021; U.S. Geological Su ey, 2019b)
S a es, Russia and India. The analysis u he sugges s ha
i is highly likely ha he in ensi y ac o o India lies some-
whe e be ween 3,5 and 4,5. Addi ionally, i can be assumed
oughly ha he in ensi y ac o s o Russia and Uni ed S a es
lie somewhe e be ween 2,0 and 3,5 ons CO2pe on o i on
and s eel, na owing a leas a ange o in ensi ies o u -
he esea ch. One could d aw he in e ence ha he ac o
[OECD D24T25] ep esen s addi ional emissions, commonly
known as scope 3 emissions. This could po en ially explain
he ma ked a ia ion in he case o China and he Uni ed
S a es. Howe e , i is unexpec ed ha he Russian alue o
[OECD D24T25]is conside ably lowe han o he es ima es,
including he es ima ion om [EU JRC].
The same analysis, analogous o he i on and s eel indus-
y, is ca ied ou o he aluminum indus y (U.S. Geological
Su ey, 2019a), p esen ing he esul s in Figu e 22.
The p esen ed cha e eals ha he in ensi y o CO2
emissions in he aluminum indus y is conside ably highe
when compa ed o he i on and s eel indus y. Addi ionally,
he a iances in in ensi ies be ween coun ies a e mo e p o-
nounced in he aluminum indus y, whe e he esul s om
[D24T25]exhibi bo h lowe and highe in ensi ies han
hose epo ed in [IEA PECM]and [IEA PECMBP]. Excep o
he Uni ed S a es, he de ia ions o in ensi ies among coun-
ies all wi hin he ange o 5 o 7 ons o CO2pe on o
aluminum p oduced. No ably, he alues om [IEA PECM]
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-19931986
Figu e 22: Compa ison o in ensi y o CO2emissions ac o s o aluminum depending on he da a sou ce and me hod o calcula ion, 2018
(BP, 2019; GHG P o ocol & Gillenwa e , 2005; IEA, 2023; O ganisa ion o Economic Co-ope a ion and De elopmen , 2021; U.S.
Geological Su ey, 2019a)
and [IEA PECMBP] o he Uni ed S a es a e signi ican ly
highe han hose om [OECD D24T25]. I is no ewo hy
ha he subs an ial di e ence be ween [IEA PECM]and [IEA
PECMBP]indica es ha dis inc emission ac o s o elec ic-
i y ha e a signi ican impac . The e o e, he Uni ed S a es
is p esumed o ha e he highes elec ici y consump ion pe
on o aluminum p oduced, ollowed by China and Russia. In
con as , India elies less on elec ici y o p oduce i on and
s eel, acco ding o [IEA PECM]and [IEA PECMBP]. Ne e -
heless, he alues epo ed o India seem implausibly low
and a e likely miscalcula ed.
Acco ding o his analysis, he da a on embodied emis-
sions sugges s ha he expo ing coun ies mos a ec ed by
CBAM, when impo ing o Ge many, will be China and Rus-
sia, ollowed by India. This s a emen , howe e , is o be
p o en in he nex chap e as he addi ional p oduc ion cos s
posed by CBAM may ha e a diminished e ec due o he cos s
ad an ages ha such coun ies ha e compa ed o wes e n
coun ies. Figu e 23 ein o ces he sugges ion ha he im-
pac o CBAM is g ea ly dependen on he app oach used o
calcula ing he embodied emissions, as demons a ed in he
i on, s eel, and aluminum sec o s. Excep o India, he in-
ensi y ac o s pe coun y exhibi subs an ial a ia ion in all
cases. The e ec is pa icula ly e iden in China and Russia,
pe haps owing i o he signi ican quan i y o i on and s eel
aded wi h Ge many.
The ollowing chap e sc u inizes he analysis, emphasiz-
ing he po en ial implica ions o CBAM on he p oduc ion cos
s uc u e o each coun y.
5. Discussion
5.1. E ec o he CBAM on p oduc ion cos s and demand pa -
e ns
This chap e analyzes he po en ial impac o he p o-
posed CBAM on Ge many’s de-mand o ene gy-in ensi e
goods, as well as he impac on i s majo ading pa ne s,
including China, Russia, and India. The b eakdown o he
p oduc ion cos s pe coun y3is p esen ed in Figu e 24. The
a e age p oduc ion cos s o he EU a e also conside ed in
his cha , o he sake o compa ison. The a e age o al
p oduc ion cos s in EU27 a e he second highes a e he
Uni ed S a es. Ge many’s majo ading pa ne s in he i on
and s eel indus y, Russia; India and China ha e all lowe
p oduc ion cos s.
Acco ding o he da a p esen ed, Russia has he lowes
p oduc ion cos s wi h a cos ad an age o app oxima ely 100
eu o pe on o s eel p oduced, compa ed o he EU27. This is
p ima ily due o i s posi ion as he coun y wi h he second-
lowes ma e ial cos s and he lowes ene gy cos s ou o all
coun ies analyzed. In addi ion, Russia bene i s om low
labo cos s and o he cos s, posi ioning i compe i i ely in
he ma ke . Howe e , he da a sugges s ha Russia, like he
Uni ed S a es, does no p io i ize sa ings om p oduc ion by
using ecycled sc ap o sel -powe -gene a ion in i s p oduc-
ion plan s.
Following Russia, India anks second wi h sligh ly highe
ene gy and o he cos s, bu signi ican ly lowe ma e ial cos s.
Meanwhile, China has he highes ma e ial cos s among all
expo e s examined, app oxima ely 100 eu o pe on highe
han India. Howe e , China compensa es o his disad an-
age h ough he lowes labo and o he cos s. Fu he mo e,
China’s sa ings om using ecycled sc ap and sel -powe -
gene a ion almos ully coun e balance i s cos disad an age
in he aw ma e ials p ocu emen , acco ding o he da a p o-
ided.
The da a e eals ha in he compa ison o i on and s eel
p oduce s, he EU27 and he Uni ed S a es a e he leas com-
3In his chap e , he ading pa ne s o Ge many in he i on and s eel
indus y a e p esen ed om le o igh ollowing he leas cos s o p o-
duc ion, and no he hie a chy p esen ed in he chap e s be o e.
J. D. Ma inez /Junio Managemen Science 9(4) (2024) 1964-1993 1987
Figu e 23: Compa ison o embodied emissions in he i on, s eel and aluminum indus y impo ed o Ge many in 2021 pe coun y
depending on he da a sou ce and he co esponden in ensi y ac o o CO2emissions (BP, 2019,2022; Fede al S a is ical O ice
(DESTATIS), 2022b; GHG P o ocol & Gillenwa e , 2005; IEA, 2023; Koolen & Vido ic, 2022; O ganisa ion o Economic Co-ope a ion and
De elopmen , 2021)
pe i i e. Al hough hey ha e sligh ly lowe ma e ial cos s
han China, hei labo cos s a e he highes among all acil-
i ies examined. Mo eo e , Eu opean acili ies ha e he high-
es ene gy cos s while he Uni ed S a es exhibi s lowe en-
e gy cos s han China and India. Howe e , he EU27 has
a signi ican ad an age o e o he coun ies in e ms o a
high sha e o sa ings om ecycled sc ap and sel -powe -
gene a ion, which is c ucial o main aining compe i i eness
in he ma ke .
To p o ide a isual ep esen a ion o he po en ial impac
o CBAM on p oduc ion cos s, his s udy o ecas s he shi
in o al p oduc ion cos s o i on and s eel acco ding o he
me hods se in 3.3.5. The g aphs in Figu e 25 and Figu e 26
p esen he esul s o he analysis.
Figu e 25 and Figu e 26 p esen an analysis o he im-
pac o in ensi y ac o s o CO2emissions on he o e all e -
ec o CBAM du ing he 2026-2035 phase-in pe iod. Based
on he da a p esen ed in Figu e 25, i can be deduc ed ha
CBAM may no signi ican ly a ec he s uc u e o p oduc ion
cos s. Mo eo e , he e may no be a subs an ial shi in p o-
duc ion and demand pa e ns in he sho o long e m, and
China is likely o main ain i s cos ad an ages. Russia will
