Impact of carbon border adjustment mechanism on iron-steel and cement sectors in Turkey: a social accounting matrix multiplier analysis

2022-5
Kılınç, Ayşegül
The iron-steel and cement sectors are essential elements of the global economy and also significant greenhouse gas (GHG) emitters. The most important GHG emission sources of the industrial processes and product use (IPPU) sector in Turkey are CO2 emissions from these two sectors, nearly three quarters of total emissions by IPPU. Emissions by IPPU have become critical especially after the European Green Deal (EGD) and the concomitant carbon border adjustment mechanism (CBAM). Although the impact of carbon pricing on national economies are widely researched, there are very few studies that focus on carbon pricing in Turkey. In this thesis, I first construct an up-to-date social accounting matrix (SAM) of the Turkish economy for 2019. Next, I investigate the carbon cost and potential impacts of CBAM by using SAM multiplier analysis. The results show that carbon cost of CBAM on the Turkish exporters, under three different carbon price scenarios (€45-7€1-€100/tCO2e), ranges between €1.8-€2.8-€4 billion annually. The results of SAM multiplier analysis indicate that decrease in iron-steel exports by €0.22-€0.36-€0.50 billion leads to €0.17-€0.27-€0.38 billion decrease in economywide GDP and €0.42-€0.67-€0.94 billion decrease in total output, under the three price scenarios and without considering free allocation. Decrease in cement exports by €0.05-€0.08-€0.12 billion leads to €0.06-€0.10-€0.14 billion decrease in GDP and €0.14-€0.22-€0.37 billion decrease in total output under the same price levels and allocation policy. This thesis also provides an evaluation of free allocation under CBAM for iron-steel and cement sectors and discusses the results from the perspective of free allocation.

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Citation Formats
A. Kılınç, “Impact of carbon border adjustment mechanism on iron-steel and cement sectors in Turkey: a social accounting matrix multiplier analysis,” M.S. - Master of Science, Middle East Technical University, 2022.