CBAM vs CCA comparison

The Carbon Border Adjustment Mechanism (CBAM) and Carbon Cost Adjustment (CCA) are both strategies aimed at addressing carbon leakage and ensuring the competitiveness of industries within territories that enforce stringent carbon emissions regulations. CBAM is a policy tool proposed by the European Union as part of its Green Deal, designed to impose a carbon price on imports of certain goods from outside the EU, where those goods are produced under less stringent carbon emissions standards. It seeks to level the playing field for EU producers facing higher costs due to the EU's carbon pricing mechanisms, such as the EU Emissions Trading System (ETS), and to encourage greener production practices globally. On the other hand, CCA refers to adjustments made within carbon pricing mechanisms, like the ETS, to mitigate the risk of carbon leakage by providing certain industries with allowances or rebates that effectively lower their carbon costs. The aim is to prevent businesses from relocating their production to countries with laxer emissions standards or to prevent the increase in market share of imported goods with higher carbon footprints. Both CBAM and CCA aim to address the issue of carbon leakage and promote global emissions reductions. However, CBAM does so by adjusting the cost of imports to reflect their carbon content, while CCA adjusts the carbon pricing burden for domestic industries deemed at risk of carbon leakage.