Carbon Leakage under CBAM and Free Allocation – 2nd Stakeholder Meeting
This meeting is by invitation only. If you are interested, please contact tpaperini@ercst.org
ERCST and the Climate Economics Chair (CEC) are carrying out a study on the long-term effects of free allocation versus full auctioning on industry, the carbon price, and investment signals. The project will develop and run a model that incorporates international trade and carbon leakage, including the interplay between free allocation and CBAM.
The work will encompass a number of iterative consultations with stakeholders, and will result in a paper in early 2026 that will provide evidence-based policy recommendations to inform future reforms of EU ETS and CBAM.
The 2nd Stakeholder meeting will include presenting the preliminary model results. These will include insights into how different allocation methods affect carbon prices, firm behavior, and industrial structure. Using a combination of theoretical modeling and input-output linkages, the project will quantify the extent of reshuffling and evaluate policy options such as extending the CBAM to downstream sectors and adjusting for carbon cost pass-through.
