Effects of Carbon Border Adjustment Mechanisms on Emissions, Industrial Competitiveness and Carbon-Capture Investment in Developing and Emerging Economies

The definitive phase of the European Union Carbon Border Adjustment Mechanism (CBAM) commenced on 1 January 2026 for cement, aluminium, fertilisers, iron and steel, hydrogen and electricity. The policy is intended to equalise carbon costs and reduce leakage, but its distributional consequences are asymmetric because developing and emerging economies often combine carbon-intensive production, limited measurement-reporting-verification capacity, expensive capital and strong dependence on a narrow set of exports. This study develops an integrated trade-carbon-cost framework linking multi-regional input-output and computable-general-equilibrium channels with product-level carbon footprints, price-elasticity analysis and plant-level carbon capture and storage (CCS) investment thresholds. The legal baseline incorporates the 50-tonne de minimis rule, the 2026-2034 phase-in, recognition of carbon prices paid in the country of origin and the published Q2-2026 certificate price of EUR75.28/tCO2. World Bank exposure rankings are combined with six literature-calibrated industrial archetypes: blast-furnace steel, cement clinker, primary aluminium, ammonia, grey hydrogen and coal-based electricity.