Industrial European regions at risk within the Fit for 55: How far implementing CBAM can mitigate?

Abstract

The transition to a low-carbon economy can create new job opportunities but may cause job displacement in some sectors that heavily rely on fossil fuels. In order to gain a balanced appraisal in understanding the broader consequences of climate policies, this paper analyses the impact of the EU Fit for 55 with carbon border adjustment on EU employment at the regional level. Research findings prove that certain regions are disproportionately affected by job losses, indicating that the acceptability of these targeted policies should address these potential inequalities. The most exposed are regions with vast energy mining industries, however implementing CBAM reduces the exposure of regions with energy-intensive industries. Some regions in Greece, Spain and Italy are still very vulnerable post-CBAM implementation, suggesting high sensitivity of job losses and low capability of these regions to deal with energy transition. Accordingly, ensuring effective support for these vulnerable regions is critical to enhancing public acceptance and further cooperation for the EU climate commitment and a more well-managed transition to a low-carbon economy.

Keywords

• European Union
• Carbon border adjustment
• Computable general equilibrium model
• Jobs
• Energy intensive industries
• Employment impacts