The impact of the EU Carbon Border Adjustment Mechanism: Evidence from EU-India complex supply chains

This article explores the potential impacts of the European Union’s implementa- tion of the Carbon Border Adjustment Mechanism (CBAM) on its trade partners. With a focus on the iron and steel sector, India’s trading flows were examined at the state and company levels. An empirical analysis is conducted using worldwide datasets to evaluate potential responses to the current CBAM status. In addi- tion to identifying high-risk countries and assessing the carbon intensity among exporters, linear models are employed to disclose relevant changes in firms’ sup- ply chains. Despite the policy’s early stages, the research wants to provide novel insights for analysing the complex implications of a fully implemented CBAM. The findings are also relevant for policymakers to reconsider and assess the status of their net-zero programmes.