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The European Union Carbon Border Adjustment Mechanism as a Green Tax Policy Instrument

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  • Rodrigues Aldeia Susana Cristina

    (Portucalense University, REMIT-Research on Economics, Management and Information Technologies IJP-Portucalense Legal Institute, R. Dr. António Bernardino de Almeida 541, 4200-072, Porto, Portugal; Instituto Politécnico da Maia, Avenida Carlos de Oliveira Campos - Castêlo da Maia / 4475-690 Maia, Portugal)

Abstract

This article aims to analyse the conformity of the European Union‘s Carbon Border Adjustment Mechanism (CBAM), considering tax principles as an environmental and fiscal policy instrument and its role in promoting a healthy environment and global decarbonisation. Literature highlights reasons for the CBAM‘s relevance, promoting carbon leakage risk reduction and encouraging less advanced countries to lower emissions through carbon diplomacy. This mechanism is expected to significantly impact the EU‘s partner economies, particularly developing ones reliant on exports. Thus, the paper’s goal is to advance academic research and understand its role in achieving environmental neutrality. The study applies the legal research method to tax principles, and Regulation (EU) No 2023/956 was examined for this purpose. The results show that CBAM is presented as an instrument that promotes tax neutrality, being in line with tax principles. Furthermore, CBAM promotes legal certainty, allowing companies to make investment decisions on decarbonising industrial processes in the long term. In addition, this mechanism is a step towards guaranteeing the promotion of a healthy environment, a right recognised by the United Nations. This study highlights the importance of CBAM as an environmental policy instrument and a fiscal mechanism that promotes fiscal justice and environmental sustainability.

Suggested Citation

  • Rodrigues Aldeia Susana Cristina, 2025. "The European Union Carbon Border Adjustment Mechanism as a Green Tax Policy Instrument," Central European Economic Journal, Sciendo, vol. 12(59), pages 85-101.
    • Handle: RePEc:vrs:ceuecj:v:12:y:2025:i:59:p:85-101:n:1006
    DOI: 10.2478/ceej-2025-0006
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    References listed on IDEAS

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    1. Alex Borodin & Vladislav Zaitsev & Zahid F. Mamedov & Galina Panaedova & Andrey Kulikov, 2022. "Mechanisms for Tax Regulation of CO 2 -Equivalent Emissions," Energies, MDPI, vol. 15(19), pages 1-15, September.
    2. Jill A. Brown & Cynthia Clark & Anthony F. Buono, 2018. "The United Nations Global Compact: Engaging Implicit and Explicit CSR for Global Governance," Journal of Business Ethics, Springer, vol. 147(4), pages 721-734, February.
    3. Alice Pirlot, 2022. "Carbon Border Adjustment Measures: A Straightforward Multi-Purpose Climate Change Instrument?," Journal of Environmental Law, Oxford University Press, vol. 34(1), pages 25-52.
    4. Fochmann, Martin & Kiesewetter, Dirk & Sadrieh, Abdolkarim, 2012. "Investment behavior and the biased perception of limited loss deduction in income taxation," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 230-242.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Environmental Policies; Green Taxation; Green Tax Agenda; Taxation; Tax Principles;
    All these keywords.

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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