EsadeGeo and Fundación Repsol co-hosted a closed-door workshop in Madrid titled “Measures to combat Climate Dumping.”  The session moderated by EsadeGeo Senior Fellow Omar Rachedi counted on the insights of Andrei Marcu, founder and Executive Director of the European Roundtable on Climate Change and Sustainable Transition (ERCST), to assess how the EU’s Carbon Border Adjustment Mechanism (CBAM) might reshape trade, compliance markets and corporate decarbonisation strategies.

Rachedi opened with a concise walkthrough of CBAM’s legal architecture and timeline, drawing on the European Commission’s 2021 proposal. He stressed that CBAM effectively extends the EU Emissions Trading System (ETS) carbon price to imported goods, thereby closing the main loophole for carbon leakage without resorting to free allowances.

Marcu underscored the practical difficulties firms face in quantifying embedded emissions, noting that plant-level data requirements could overwhelm small and medium-sized enterprises unless the Commission finalises a streamlined methodology.

The roundtable then debated the so-called “Brussels Effect.” Will CBAM encourage neighbours to introduce their own carbon-pricing schemes, or will it ignite a new cycle of trade friction? Fundación Repsol provided the corporate perspective, arguing that robust voluntary and compliance carbon markets can dovetail with CBAM once monitoring, reporting and verification standards converge. 

Marcu closed with a reminder that CBAM’s success will rest on its ability to increase carbon prices in other countries with big markets, such as China, before the end of the next decade.

A podcast version of the dialogue is available.