Monitoring, Verification, and Trade Exposure: Evaluating Cross-Border Adjustment Mechanism (CBAM) Compliance in Pakistan’s Steel Sector †

Abstract

This study examines Pakistan’s steel sector’s readiness to comply with the European Union’s Carbon Border Adjustment Mechanism (CBAM), which mandates verified emissions disclosures for carbon-intensive imports. Although the sector primarily uses electric arc furnace (EAF) technology, recognized for its lower emissions, Pakistan lacks a formal Monitoring, Reporting, and Verification (MRV) framework to support product-level emissions certification. Through qualitative research, including stakeholder engagements and policy analysis, the study identifies key barriers related to emissions data, institutional capacity, and trade exposure. This study proposes actionable policy recommendations to strengthen MRV systems, facilitate compliance, and enhance the sector’s competitiveness in regulated markets.