Green Europe, but fair? A critical analysis of CBAM – Jindal Forum for International and Economic Laws
The European Union speaks with one voice when it comes to trade related policiesmaking it one of the EU’s most important tools when it engages with nations beyond its borders. As Schmitz and Seidl mention, since the 1980s, the EU pursued a neoliberal trade strategy, advocating for global trade and liberalization as well as following international trade rules. However, due to the contemporary protectionist turns performed by the US and China and the growing tensions with Russia, the EU has embraced a new idealism regarding its trade strategy, framed as Open Strategic Autonomy (OSA). As a response to the deterioration of global cooperation, OSA aims to maintain EU’s trade strategy as open as possible while maintaining its assertiveness and resilience when necessary, as a way of being able to maintain EU’s industries competitive in the global scheme.
The Carbon Border Adjustment Mechanism, commonly known as CBAM, is a policy launched by the EU to put a fair price on the carbon emitted during the production of carbon intensive goods that enter the EU. As part of the new official trade strategyit has been one of the most contested OSA-related policies.
CBAM is a part of the Fit for 55 Package, the group of legislative proposals presented by the EU that has at its core the aim to reduce greenhouse gas (GHG) emissions by fifty-five per cent before 2030, in comparison with the levels from 1990. It’s part of the European Green Deal that aims for EU’s climate neutrality by 2050. The policy’s origins are linked to the Emissions Trading System (ETS), the internal EU’s reduction scheme for GHG emissions, and its official main goal is to prevent carbon leakage (the situation that occurs when EU firms move their production to third countries where they don’t have as carbon-stringent policies as the ones in place in the EU).
CBAM is a powerful tool to tackle climate change through the global reduction of GHGs emissions, but raises an uncomfortable question: can Europe lead the global climate fight by imposing its own rules to the rest of the world without listening to it? Scholars tend to contest the policy focusing on three perspectives on how the policy affects other countries, those are: the “economic power perspective”, the “trade perspective”, and the “justice perspective”. This piece will focus on the “justice perspective”, using as a baseline the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDRRC) to act.
The CBDRRC principle, in the climate policy sphere, asserts that while all nations share a moral obligation to address climate change, developed countries must take greater action due to their more extensive capacities and their highly historical and contemporary contributions to climate change. Formalised at the 1992 United Nations Conference on Environment and Development in Rio de Janeirothe principle appeared for the first time in the Kyoto Protocol and since then has been part of the climate change international agreements in different ways.
The Commission published in 2021 an impact assessment report on CBAMwhere under the section “2.1.2 The CBAM in the context of the Paris Agreement” stated that “In order to respect the Paris Agreement and (…) the principle of Common but Differentiated responsibility, the CBAM would be designed in such a manner that it does not directly depend on the overall level of ambitions of a country nor on the policy choices made by a country”.
Nonetheless, this same statement and the initial formulation of CBAM shows that: first, the EU considers and frames itself as the normative world power to decide the rules of the climate change trade field in the absence of an international enforcing framework. And second, undermines the principle of the CBDRRC as this approach does not consider that countries with lower climate ambitions will not only face higher payments under the CBAM’s original formulation but also have less capabilities to decarbonize.
The application of CBAM uniformly across all countries, without considering their individual climate ambitions, overlooks the varying capacities of nations to achieve climate goals, which conflicts with the CBDRRC principle. Simultaneously, the initial policy is framed in a way that tries to subsume the normative principle of CBDRRC into another normative framework as states that (the policy) “will be designated while taking into account the effects of the policies carried out by our partners across the globe”, nonetheless, those policies will have to be similar to the ones in the EU, thus being carbon prices.
CBAM is presented as a policy that will promote environmental sustainability and thus, will benefit mostly the Global South countries as they are the ones that will suffer the most from climate change. Nonetheless, the predicted outcomes for LDCs establish an inconsistency as the formulation of the policy does not take into consideration the impacts it will have nor the current socioeconomic inequalities between more and least developing countries.
Since the universal nature of the principles promoted indicate the normative value of Europe’s power, inclusiveness and reflexivity become crucial criteria for assessing this universality. Inclusiveness determines whether the EU gives voice to external actors affected by its foreign policy or just promotes principles in the name and interest of the Union. For EU power to be normatively justifiable, it must involve those outside its borders in its policymaking.
Institutional reflexivity is essential for distinguishing between intentional and adaptive EU behavior and routine and potentially Eurocentric behavior. It involves the ability of EU foreign policymakers to critically analyze their own policy and adapt them based on the expected effects in target areas. Reflexive behavior suggests a “conscious” effort to analyze the consequences of norm promotion for all stakeholders, which contributes to a more complete and nuanced assessment of the European External Policy.
In CBAM’s first formulation, the EU risks acting more like an economic superpower than an ethical leader. As studied by different authorscountries like Mozambique, whose economy relies heavily on aluminum exports to Europe, will see their incomes fall without access to sufficient financing or support to decarbonize their production. Actors such as Hakima el Haite, former Minister of Energy of Morocco – denounced the lack of real participation of partner countries in the formulation of CBAM and the absence of clear adaptive measures to address anticipated impacts shows that these qualities are either absent or underdeveloped. Despite proposals by the European Parliament to allocate CBAM revenues to finance climate action in vulnerable countries, the current regulation prioritizes the domestic use of these resources, reinforcing the perception of a unilateralEurocentric, and potentially neocolonial mechanism.
Aloma Gómez Reus is pursuing a masters degree in International Relations and European Studies at Leiden University.
Picture Credit: AI Generated (modified by JFIEL)