Neuhoff, Karsten Sato, Misato Ballesteros, Fernanda Böhringer, Christoph Borghesi, Simone Cosbey, Aaron Deletombe, Thibault Felsmann, Balázs Ismer, Roland Johnston, Angus Linares Llamas, Pedro Matikainen, Sini Pauliuk, Stefan Pirlot, Alice Quirion, Philippe Rosendahl, Knut Einar Sniegocki, Aleksander van Asselt, Harro Zetterberg, Lars 2026-06-04T04:32:13Z 2026-06-04T04:32:13Z 2026-09-01 0301-4215 https://doi.org/10.1016/j.enpol.2026.115405 http://hdl.handle.net/11531/110414 Artículos en revistas The European Carbon Border Adjustment Mechanism (CBAM) has the dual objective of preventing carbon leakage and encouraging adoption of low-carbon technologies abroad. Yet, pursuing both objectives with the same mechanism results in incomplete carbon leakage protection unless global carbon prices converge. As the current geopolitical situation makes rapid convergence seem unlikely, an extension of free allowance allocation is being discussed for affected sectors. This would, however, mute most carbon pricing incentives and reduce carbon pricing revenues. This paper argues that until progress on global carbon pricing is reached, the CBAM should be reformed to use standardized values rather than production-specific emission intensities for materials with complex value chains. With the reform, emission trading with free allowances at benchmark level continues to provide the carbon price and incentives for conventional producers. To close the carbon pricing gap, a standardized liability per ton of material is included, independent of production process or location. It can be subject to established border adjustments along the full value chain, including export relief. Such a reform would not create direct incentives for climate-friendly material production and carbon pricing in third countries but would ensure carbon pricing incentives along the domestic value chain and carbon pricing revenue to fund climate action. This would enhance investment stability, support industrial transformation, and address carbon leakage risks in a fragmented global policy landscape. The European Carbon Border Adjustment Mechanism (CBAM) has the dual objective of preventing carbon leakage and encouraging adoption of low-carbon technologies abroad. Yet, pursuing both objectives with the same mechanism results in incomplete carbon leakage protection unless global carbon prices converge. As the current geopolitical situation makes rapid convergence seem unlikely, an extension of free allowance allocation is being discussed for affected sectors. This would, however, mute most carbon pricing incentives and reduce carbon pricing revenues. This paper argues that until progress on global carbon pricing is reached, the CBAM should be reformed to use standardized values rather than production-specific emission intensities for materials with complex value chains. With the reform, emission trading with free allowances at benchmark level continues to provide the carbon price and incentives for conventional producers. To close the carbon pricing gap, a standardized liability per ton of material is included, independent of production process or location. It can be subject to established border adjustments along the full value chain, including export relief. Such a reform would not create direct incentives for climate-friendly material production and carbon pricing in third countries but would ensure carbon pricing incentives along the domestic value chain and carbon pricing revenue to fund climate action. This would enhance investment stability, support industrial transformation, and address carbon leakage risks in a fragmented global policy landscape. en-GB Revista: Energy Policy, Periodo: 1, Volumen: online, Número: , Página inicial: 115405-1, Página final: 115405-6 Instituto de Investigación Tecnológica (IIT) Industrial decarbonization in a fragmented world: Carbon pricing with border adjustments using standardized values info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion info:eu-repo/semantics/openAccess