TBILISI, Georgia, May 2. TheEU's Carbon Border Adjustment Mechanism to affect CAREC countries, ADB Director General for Central and West Asia Evgeny Zhukov said during the panel discussions on "Financing Greener Value Chains in the CAREC (Central Asia Regional Economic Cooperation Program) region" at the ADB Annual Meeting in Tbilisi, Trend reports.
The EU's Carbon Border Adjustment Mechanism (CBAM) is currently in a transitional phase (October 2023–December 2025) to expand to all emissions trading system (ETS)-covered sectors in 2026.
The EU will impose import charges on carbon-intensive products like cement and electricity based on the carbon dioxide emissions embedded in their production.
CBAM seeks to align global carbon prices, accelerate emission reductions worldwide, and reduce "carbon leakage".
''It can significantly impact GVC supplier economies with higher shares of carbon-intensive exports to Europe, particularly Central and West Asia. Carbon pricing policies are in place across almost 40 jurisdictions. The CAREC region will be affected by CBAM. China will have a significant reduction in CO2 emissions and contribute to global reduction under this scenario,'' he said.
Zhukov noted that CBAM in both the EU and OECD without carbon pricing in CAREC will increase emissions in all CAREC economies due to possible carbon leakage and downstream production shifting to CAREC economies.
''For CAREC countries with high CO2 intensities in extractive sectors, CBAM can create a challenge. CBAM could lead to significant declines in exports and industrial production in CAREC countries in CBAM-covered sectors. CAREC 10 countries (excluding China) are estimated to have the most substantial decline in total exports,'' he emphasized.
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