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Evaluating export vulnerability through import demand elasticity in carbon border adjustment contexts: a focus on
Tayfur Bayat1, Emre Ozsalman2, Omer Faruk Derindag3
1Department of Economics, Faculty of Economics and Administrative Sciences, Inonu University, 44000, Malatya, Turkey.
Environmental Science and Pollution Research International
|January 6, 2025
Summary
Türkiye
Area of Science:
- Environmental Economics
- International Trade Policy
- Climate Change Mitigation
Background:
- The Carbon Border Adjustment Mechanism (CBAM) impacts international trade and national decarbonization efforts.
- Understanding Import Demand Elasticity (IDE) is crucial for assessing trade policy effects.
- Türkiye's export sector faces challenges under new climate regulations.
Purpose of the Study:
- To analyze the impact of CBAM on Türkiye's export of key commodities to the EU-27.
- To estimate Import Demand Elasticity (IDE) for cement, fertilizers, chemicals, steel, and aluminum.
- To project potential export losses and price increases for Türkiye under CBAM.
Main Methods:
- Econometric analysis using CCE and AMG methodologies to estimate IDE.
- Analysis of export quantities and unit prices from 2002-2021.
- Scenario-based modeling of price increases and export loss projections.
Main Results:
- High IDE values were found for cement (1.95), steel (1.85), aluminum (1.47), and fertilizers/chemicals (1.20).
- Türkiye's iron and steel exports to the EU-27 risk a decline of approximately 25% under CBAM.
- The aluminum sector is projected to be the least affected by CBAM among the analyzed products.
Conclusions:
- Türkiye must accelerate decarbonization to maintain its EU export market share.
- High IDE suggests significant vulnerability to CBAM-related price adjustments.
- Proactive climate policies are essential for mitigating trade risks associated with carbon regulations.
Keywords:
Carbon border adjustment mechanismCarbon emissionDecarbonizationImport demand elasticityInternational tradeMore Related Videos
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