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The Potential and Distributional Effects of CBAM Revenues as a New EU Own Resource

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  • Hillebrandt Ruben

    (Faculty of Economics and Social Sciences, 9144 Heidelberg University , Bergheimer Straße 58, 69115 Heidelberg, Baden-Württemberg, Germany)

Abstract

Carbon Border Adjustment Mechanism (CBAM) revenues are increasingly being discussed as a potential new EU own resource. The aim of this paper is to quantify the revenue potential of the CBAM for the EU budget until 2035. Furthermore, this paper examines the distributional implications of CBAM revenues for Member States. It proposes a methodology to quantify the revenue potential of CBAM and calculates a number of revenue scenarios. The distribution of CBAM revenue among all Member States is compared with the distribution of the GNI-based resource in order to illustrate the distributional effects. According to these results, the annual revenue potential of the CBAM is of the order of €1 billion in the first years after its introduction, rising to around €14 billion by 2035. The distributional effects compared to GNI proportionality are small. The scenario analysis shows the sensitivity of the CBAM revenue forecasts, as they depend crucially on various parameters.

Suggested Citation

  • Hillebrandt Ruben, 2024. "The Potential and Distributional Effects of CBAM Revenues as a New EU Own Resource," The Economists' Voice, De Gruyter, vol. 21(2), pages 275-296.
    • Handle: RePEc:bpj:evoice:v:21:y:2024:i:2:p:275-296:n:1012
    DOI: 10.1515/ev-2024-0071
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    More about this item

    Keywords

    carbon border adjustment mechanism (CBAM); EU own ressources; EU budget; next generation EU; European emission trading system; EU ETS;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F18 - International Economics - - Trade - - - Trade and Environment
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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