In light of increasing cognizance regarding the impacts of climate change, nations are exploring methods to both reduce its severity and adapt to its consequences. One innovative solution is the implementation of the Carbon Border Adjustment Mechanism (CBAM). As leading economies strive to fortify their supply chains against future disruptions brought on by a changing climate, these developments are likely to have far-reaching implications for the Korean economy as well.
This study endeavors to assess the ramifications of the implementation of CBAM on international trade and the Korean economy, and to thoroughly examine the pivotal technologies deemed crucial in mitigating the adverse effects of climate change through reduced carbon emissions. The examination commences by analyzing the international trade and embodied carbon emissions pertaining to the products associated with CBAM. Subsequently, the study employs the Caliendo and Parro (2015) multi-country, multi-sector Ricardian model to quantify the impact of CBAM. Furthermore, the study evaluates the influence of cutting-edge technologies aimed at reducing carbon emissions on the outcome of the analysis. Finally, the study delves into five categories of climate-change mitigating technologies and formulates strategies to advance and enhance the competitiveness of Korean industries in these areas.
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