EU carbon border tax could hit some Asia exports but has limited impact on emissions: ADB

THE new carbon border tax by the European Union could hurt exports of some Asian markets and even raise costs for EU manufacturers, the Asian Development Bank (ADB) said in a report on Monday (Feb 26).

Despite the negative trade impact, the tariff – known as the Carbon Border Adjustment Mechanism, or CBAM – may not actually reduce carbon emissions by much, the ADB found in its 2024 edition of the Asian Economic Integration Report.

CBAM imposes a carbon price on emissions-intensive products imported into the EU, such as steel, cement and fertilisers. It went into effect in October 2023 on a transitional basis, and will be fully imposed from 2026.