Commentary: CBAM opposition at COP29? Bring it on!

COP29 in Baku has seen pushback against the EU’s Carbon Border Adjustment Mechanism (CBAM). On 5 November, on behalf of the BASIC countries (Brazil, China, India, and South Africa), China submitted a request to include discussions on “concerns with climate-change related unilateral restrictive trade measures, and identifying the ways to promote international cooperation in line with the First GST Outcome.” In other words, the BASIC countries wanted to use COP29 discussions as a forum in which to oppose the EU CBAM on a global stage. For more on China’s negotiating positions at COP29, read our analysis here.

Though the attempt to put the CBAM discussion on the COP agenda failed, it constitutes one of the most public, “official,” and unified (China in the name of all BASIC countries together) statements of opposition to Europe’s CBAM yet. It signals that more such public opposition is in the works, given that the border adjustment mechanism is currently in its initial phase where only reporting is required, but fees will start being collected in 2026.

However, taking a step back it is worth considering that the BASIC countries, especially China, have opposed every step of the EU’s path towards a CBAM and have been expressing this opposition in every possible relevant international forum: bilateral talks with the EU, opposition through the World Trade Organization (WTO), at the G7 talks, and now at COP29.

At home, however, China has been busy improving its own domestic carbon pricing system by further operationalizing its carbon market (the Chinese national ETS) with plans to expand it to cover precisely the sectors subject to Europe’s CBAM. So have other BASIC countries: South Africa has a carbon tax, India is planning a national carbon market, and Brazil’s legislature this month passed a bill enacting a national ETS slated to cover sectors subject to Europe’s CBAM.

Meanwhile, the EU’s CBAM is not going away anytime soon. In fact, it is more likely that it will be applied to more sectors after its review in 2026. The EU’s Green Deal makes no secret of the fact that Europe will aggressively pursue its climate targets – the CBAM is one component of that deal - and represents a willingness to address climate change through multilateral trade. The statement it conveys is “If the rest of the world has insufficient climate ambition, we are going to try anyway - sorry if that impacts your producers.”  Trying to up climate ambition globally takes many forms, and the CBAM is just one of them. Complementing its soft stick is an array of EU soft carrots in the form of “climate diplomacy” including support to develop carbon pricing instruments like emission trading systems in other countries.

The same approach was taken with shipping, in that 50% of emissions from international maritime voyages are covered by the EU ETS and in that berthing at EU ports requires compliance with FuelEU Maritime. The decision to pursue the inclusion of shipping under the EU ETS came after the International Maritime Organization failed to come up with any binding international emissions reduction scheme.

Similarly on the international aviation front, the long-term ambition of the International Civil Aviation Organisation’s greenhouse gas throttling measure CORSIA remains underwhelming, while its participant nations fail to transcribe it into national law. Though voluntary carbon market stakeholders are eyeing the EU as a potential source of demand for CORSIA credits, what the EU ETS Directive actually says is (paraphrased), “toughen up, or extra-EU aviation is back to being covered by the EU ETS.” CORSIA has not toughened up, and the transcription of CORSIA into EU law is conditional based on a derogation that lapses in 2027. If CORSIA is not deemed by the European Commission to reign in international aviation emissions sufficiently by that point, emissions of flights from EU airports to extra-EU destinations are covered by the EU ETS by default, with the details to be figured out by legislators.  From the EU perspective, international aviation has had 15 years to figure out an incentivization scheme to reduce emissions and has done very little. Sorry, CORSIA but too little, too late.

From the EU CBAM to Maritime to extra-EU aviation, the EU is not pursuing unilateralism because it is unwilling to be multilateral, it is pursuing open unilateralism because multilateralism has spurred little quantifiable action.