Shall the CBAM be expanded further downstream? Insights from assessing products along the automotive value chain

Abstract

The EU's carbon border adjustment mechanism (CBAM) replaces the free allocation in the EU ETS 1 as the main carbon leakage instrument. The study discusses the potential expansion of the CBAM to downstream products. Using the example of products from the automotive value chain (wheels, brakes, crankshafts, forged and flat-rolled primary products), it shows that the CO₂ costs vary greatly depending on the product. The estimates of the carbon costs are complemented with expert assessments from interviews. The study then derives a series of criteria to be considered for the extension of CBAM to downstream products.