Carbon leakage, leaking policies: How the EU’s CBAM is impacting Indonesia and Taiwan

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🗞️ Driving the news: The EU's Carbon Border Adjustment Mechanism (CBAM) is impacting climate policies in Indonesia and Taiwan as part of the European Green Deal 
• This tariff aims to prevent carbon leakage by requiring importers of certain goods to the EU to buy certificates matching the EU's carbon price, with a plan to expand to all imported goods after 2026

🔭 The context: CBAM, in its transitional phase, targets industries like cement, iron, and steel 
• This move aims to encourage global decarbonization efforts and equitable carbon pricing 
• Indonesia and Taiwan are adjusting by investing in renewable energy and developing their carbon pricing mechanisms

🌍 Why it matters for the planet: By addressing carbon leakage, the EU's CBAM encourages countries to invest in green energy and establish carbon pricing mechanisms, aiming for a global alignment on carbon emissions reduction 
• This initiative underscores the interconnectedness of global trade and environmental sustainability efforts

⏭️ What's next: The implementation of CBAM will reshape trade relations, particularly affecting countries like Indonesia and Taiwan, which are developing their policies to protect their industries while pursuing economic development and net-zero emissions goals 
• The broader implication involves a global shift towards integrating environmental considerations into economic and trade policies

📈 One stat: CBAM is expected to generate an estimated US$9 billion a year by 2030, with part of the revenue aiding decarbonization initiatives in lower-income trading partners

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