The Economic significance of the EU CBAM in the UK for web 02

The Economic significance of the EU CBAM in the UK for web 02 @centre4itp The economic significance of the EU CBAM in the UK Dongzhe Zhang Published 19 February 2024 CITP Briefing Paper 011 Key points • The introduction of the EU CBAM is likely to reduce demand for UK exports to the EU, due to differences in ETS prices, and therefore UK jobs in related industries might be impacted too. [...] We cannot at present predict how much the effect will be because it is related in complicated ways 1 to various uncertainties, like the carbon price divergence between the UK and EU and the effects of the phasing out of free allowances in both the UK and EU ETSs. [...] 3 between employment to employees in the same sector in the GB data.6 Overall, 156,169 people were directly employed in the industries producing regulated products in the UK in 2021, accounting for 0.47% of total employment in the UK. [...] First, we convert the gross value added (GVA) in each SIC 2-digit division in the UK to gross output using the corresponding ratio from the 2019 UK input-output tables.15,16 Table 5 records the ratio and estimated gross output of each of the UK’s related divisions in 2021. [...] However, the majority of the possible total impact of the EU CBAM on these industries in the UK is the possible decline in exports.19 19 The indirect impact is the difference between direct and total impact which equals to the sum of related CPA groups including the regulated sectors themselves.