The paper investigates the views of European business and civil society organizations regarding the EU's proposed Carbon Border Adjustment Mechanism (CBAM), a key component of the European Green Deal aiming for climate neutrality by 2050. The CBAM aims to mitigate carbon leakage – the relocation of carbon-intensive production to regions with less stringent climate policies – by imposing a carbon price on imported goods. The EU's approach involves strengthening its existing Emissions Trading System (EU ETS) and phasing out free allowances previously granted to certain industries. However, the precise purpose of CBAM remains debated, with suggestions including encouraging stronger climate policies in other countries, generating revenue for the EU, and promoting European climate leadership. The authors argue that the CBAM's effectiveness depends heavily on navigating the diverse perspectives within the EU, particularly from business and civil society, which play significant roles in influencing policy processes. Past attempts to introduce similar levies faced resistance, highlighting the importance of understanding these actors' viewpoints in shaping the CBAM's final design.

The existing literature on carbon border adjustments predominantly focuses on economic and legal aspects, assessing the balance between economic costs, administrative feasibility, environmental effectiveness, and international legal obligations. Studies analyze the potential effects of different CBAM designs on various stakeholders, including EU trade partners. While economic and legal considerations are central, the paper highlights a gap in the literature regarding the political dynamics within the EU, focusing specifically on the interplay between business and civil society organizations in shaping policy design. This study builds on the growing body of work emphasizing the influence of non-state actors in EU policy processes, especially in agenda-setting and negotiations. The authors note the significant influence of business and civil society organizations through lobbying, expertise provision, and public opinion shaping, particularly in the context of past failed attempts to establish carbon border levies in the EU.

The study employs a mixed-methods approach utilizing secondary data from a public consultation conducted by the European Commission between July 22 and October 28, 2020. The consultation aimed to gather opinions on policy options and identify potential challenges related to the CBAM. The researchers analyzed data from 276 respondents who allowed public access to their input and resided within the EU, focusing on business organizations (225) and civil society organizations (51). Quantitative data from an online questionnaire were analyzed using the Mann-Whitney U test to compare views between the two groups on key CBAM design issues. Qualitative data from open-ended submissions, primarily from larger organizations considered more influential in the policy process, underwent content analysis. The key CBAM design issues analyzed were selected through a literature review, focusing on overarching themes such as motivations and objectives, policy instruments, geographic scope, sectors and products covered, trade flow coverage, emissions scope, and determination of embedded emissions. The timeframe of the consultation (pre-July 14, 2021, when the Commission's proposal was published) is acknowledged as a potential limitation, though the authors argue the analysis remains relevant to ongoing negotiations.

The analysis revealed general support for CBAM among both business and civil society organizations, but with significant differences on specific design aspects. Statistically significant disagreements were identified in views on the CBAM's primary objective (reducing carbon leakage versus broader climate goals), the treatment of free allowances in the EU ETS (phasing out versus maintaining), sectoral coverage (broad versus limited), and the inclusion of export rebates (supported by businesses, opposed by civil society). While there was not statistically significant differences between groups in all areas, important differences in opinion, reflected in the qualitative data, highlighted the complexities of balancing competing interests. Businesses generally favored a narrower focus on carbon leakage mitigation and a more gradual phase-out of free allowances, while civil society organizations emphasized broader climate objectives and a faster transition. Significant differences of opinion also emerged on the issue of geographic scope and exemptions for third countries. The qualitative data provided further insights into the justifications and reasoning behind these divergent views, enriching the understanding of the underlying political dynamics.

The findings highlight the challenges in achieving a consensus on CBAM design within the EU. The significant differences between business and civil society perspectives on key design features underscore the need for political compromises to ensure the mechanism's effectiveness and international legitimacy. Balancing competing interests and integrating multiple objectives into the CBAM's design are crucial for its success. The study’s findings show the importance of engaging with a diverse set of stakeholders during policy development to address and potentially mitigate the potential conflict between various interest groups. The researchers acknowledge the limitations associated with the timing of the data collection and its potential impact on the accuracy of the results in the context of the dynamic policy process. The study contributes to the understanding of the complexities of designing and implementing effective climate policies and their implications for international relations and trade. Ultimately, the effectiveness and acceptance of the CBAM hinges on its ability to navigate the tension between competing priorities and foster a balance between economic competitiveness and environmental goals.

This research demonstrates a need for careful consideration of diverse stakeholder perspectives in crafting effective climate policies. The significant divergence between business and civil society views on CBAM highlights the challenge of navigating competing interests. Future research should examine the evolution of these perspectives as the CBAM progresses through the EU legislative process. Further exploration of international responses and adaptation strategies in third countries impacted by the CBAM would also be beneficial.

The study's reliance on data from a single public consultation limits its generalizability. The self-selected nature of the respondents may introduce bias, as those with strong opinions may be overrepresented. The pre-proposal data collection might not fully reflect views after the formal proposal’s release. The focus on larger organizations could overshadow the perspectives of smaller entities.