2675. Pay or Abate - or Circumvent? - Supply Chain Level Analysis of Adaptation Strategies Under the EU CBAM Regulation
Invited abstract in session TD-42: Sustainable supply chain design, stream Circular & Sustainable Supply Chains.
Tuesday, 14:30-16:00Room: Newlyn GR.02
Authors (first author is the speaker)
| 1. | Tobias Breitenbach
|
| Chair of Logistics and Supply Chain Management, University of Mannheim | |
| 2. | Moritz Fleischmann
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| Chair of Logistics and Supply Chain Management, University of Mannheim |
Abstract
The EU's environmental ambition to achieve carbon neutrality by 2050 has prompted concerns about a loss of competitiveness and carbon leakage, due to companies shifting production abroad. To address these challenges, the EU aims to implement a Carbon Border Adjustment Mechanism (CBAM) that imposes a levy on embedded emissions of selected imported goods. In theory, CBAM should level the playing field for carbon pricing between imported and domestic products in scope. While it is clear that this measure will affect supply chains both directly and indirectly, its specific impact on strategic supply chain decisions—as well as the influence of particular supply chain and policy design characteristics, including potential circumvention options—remains insufficiently understood to date.
In response, this research develops a scenario-based analytical model of a two-stage supply chain, incorporating the varying incentives induced by the CBAM across different supply chain stages and locations. The model assesses the effects on multi-stage location decisions, green technology investments, and profits while accounting for circumvention options and identifying the conditions under which they are expected to be adopted. These insights enable an evaluation of the CBAM's effectiveness in achieving its sustainability and competitiveness objectives and provide a basis for assessing potential CBAM extensions and design modifications by specifically accounting for supply chain responses.
Keywords
- OR in Sustainability
- Supply Chain Management
- Network Design
Status: accepted
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