Climate action in the making: business and civil society views on the world’s first carbon border levy

Abstract

Carbon border levies have been suggested as an important tool for ramping up climate action. Such a levy is being negotiated as part of the EU’s Green Deal, with input from public consultations. The success of the EU’s carbon border adjustment mechanism (CBAM) will depend on its design and acceptance. While most analyses focus on resistance from the EU’s major external trade partners, this article analyses the views of non-state actors within the EU. Their views will be decisive for the cohesion and determination of the EU as the CBAM proposal encounters external resistance. Examining the views of European business and civil society organizations expressed by 276 respondents in the EU’s public consultation, we show that there is general support for CBAM but divergent views on its purpose and on what to do about the allocation of free allowances in the EU Emissions Trading System, sectoral coverage, exemptions for third countries, export rebates and emissions scope. The success and strength of CBAM will depend on whether the EU is able to resolve these design issues and reach compromises between the opposing views of business and civil society. Graphical Abstract