The EU carbon border adjustment mechanism (CBAM) and China

XII The EU carbon border adjustment mechanism (CBAM) and China 3 European stakeholder views on the EU CBAM The European Commission’s 2020 public consultation on the CBAM identified the positions of several EU stakeholders regarding the mechanism. [...] 6.3 Analyzing possible response options of China and their likely impacts China may employ a variety of measures to address the possible negative impacts of the EU CBAM, including export policy adjustments, resource shuffling, sectoral expansion of the Chinese national ETS, linking the EU ETS with the Chinese national ETS, and the coordinated implementation of a carbon tax and ETS. [...] For some of the most exported products from China to the EU – such as machinery and electric products and textiles, which could be covered by the EU CBAM in the medium term – the embodied carbon emissions are relatively high, accounting for around 25% of the total export emissions f rom China to the EU in 2014 (Simola 2020). [...] This would benefit abatement in the sectors covered under the EU CBAM in third countries while also improving compliance with the EU CBAM and the availability of emissions data, which is vital to future enhancement of the instrument. [...] The EU will need to find compromises between domestic political interests and those of its trading partners, and the use of revenue is perhaps the best avenue for compromise on the international f ront without sacrif icing the environmental effectiveness of the instrument.