FROM WINDFALL GAINS TO CARBON BORDERS AND BEYOND?
| DOWNLOAD | DOI: 10.62897/COS2025.3-1.226 |
Kinga Pintér-Povázsán*, László Pardavi
*Széchenyi István University, Egyetem tér 1, 9026 Győr, Hungary
p.p.kingaaa@gmail.com
Abstract: One of the most important EU instruments for combating climate change is the European Union Emission Trading System (EU ETS), which uses market mechanisms to encourage reductions in greenhouse gas emissions. An important element of the system is to prevent carbon leakage, so that actual emission reductions are achieved at the global level and the rules do not merely lead to a shift in emissions. Consequently, the aim of the study is to examine how the introduction of the Carbon Border Adjustment Mechanism (CBAM) will affect the allocation of free allowances to carbon-intensive industries and the level of state aid for indirect energy costs in order to prevent carbon leakage. The study explores the optimal solution to the resulting export price and indirect cost compensation issues, with consideration given to both climate objectives and the competitiveness of industries. The study concluded that harmonised regulation at EU level is essential to ensure that both Member States and the EU remain competitive in the future.
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