Summary:

This paper analyzes the long-term impact of the European Union's Carbon Border Adjustment Mechanism (CBAM) on China's steel industry, with a focus on quantifying the resulting cost burden and identifying the key drivers and mitigating factors. The methodology employs a dynamic, process-level scenario-based model (CBAM-CST) that links three steel production routes (BF-BOF, DRI-EAF, and Scrap-EAF) with their emission intensities, energy transition pathways, carbon pricing systems (EU ETS and China's national carbon market), and trade flows through 2050. The model integrates three sub-modules—inflation and exchange rates, CBAM certificate cost calculation, and China's steel low-carbon transformation—to simulate CBAM obligations across multiple scenarios (BAU, DCS, and NES), with sensitivity analyses examining the effects of EU ETS carbon prices, domestic carbon market inclusion, electricity decarbonization, and hydrogen utilization on total certificate costs.

Suggested citation:

Lu, B., Liu, X., Hong, J., Mo, K., You, J., Niu, N., & Wang, Z. (2026). Quantifying the long-term impact of carbon border adjustment mechanism on Chinese steel industry. iScience, *29*(3), 115089. https://doi.org/10.1016/j.isci.2026.115089

License:

Creative Commons Attribution 4.0 International License (CC BY 4.0)