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Potential Effects of the EU’s Carbon Border Adjustment Mechanism on the Turkish Economy

Author

Listed:
  • Sevil Acar

    (Bogaziçi University Hisar Campus Sariyer Istanbu)

  • Ahmet Atil Asici

    (Istanbul Technical University)

  • A. Erinç Yeldan

    (Kadir Has University)

Abstract

In December 2019, the European Union (EU) announced the European Green Deal (EGD) to create a climate-neutral continent by 2050. Accordingly, the EU Emission Trading System (ETS) will be revised to maintain economic growth against possible losses in competitiveness, leading to “carbon leakage.” The Carbon Border Adjustment (CBA) is one of the mechanisms proposed to tackle the carbon leakage problem; it is an import fee levied by the carbon-taxing region (in this case, the EU) on goods manufactured in non-carbon-taxing countries (in this case, Turkey). The purpose of this paper is to provide a first-order estimate of the potential sectoral impacts of the CBA on the Turkish economy by employing input-output methodology. Our results suggest that the CBA may bring a carbon bill of EUR 1.1-1.8 billion to Turkish exporters in the EU market. The revision of the Intended Nationally Determined Contributions (INDC) target and the ratification of the Paris Climate Agreement at the parliament are two steps that can be taken immediately. Speeding up the ongoing preparatory process of instituting an Emission Trading System (ETS) in Turkey (preferably linked to the ETS), will help minimize economic losses.

Suggested Citation

  • Sevil Acar & Ahmet Atil Asici & A. Erinç Yeldan, 2021. "Potential Effects of the EU’s Carbon Border Adjustment Mechanism on the Turkish Economy," Working Papers 1500, Economic Research Forum, revised 20 Oct 2021.
    • Handle: RePEc:erg:wpaper:1500
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    Cited by:

    1. is not listed on IDEAS
    2. Mark M. Akrofi, 2025. "Green hotspots? Unveiling global hotspots and shifting trends in carbon credit projects," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(2), pages 1782-1796, April.
    3. Gözkün, Kübra Atik & Orhangazi, Özgür, 2025. "Green transition for Turkey: Growth, employment, and trade deficit effects," Energy Policy, Elsevier, vol. 202(C).
    4. Huang, Ding-Hsiang, 2025. "Evaluation and Management of Sustainable Supply Chain Systems with Carbon Emissions and Transport Damage Based on Multi-state System Reliability Assessment," Reliability Engineering and System Safety, Elsevier, vol. 257(PA).
    5. Constantin Johnson & Max Åhman & Lars J. Nilsson & Zhenxi Li, 2025. "Emerging green steel markets surrounding the EU emissions trading system and carbon border adjustment mechanism," Nature Communications, Nature, vol. 16(1), pages 1-16, December.

    More about this item

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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