If third countries keep trading with the EU “as usual”, the CBAM in its current scope could collect €11.3 billion in fees annually. CBAM fees can be reduced to €7.3 billion (worldwide) if third country producers do resource shuffling, and further down to €7.0 billion if their national authorities set up carbon pricing. The real cost of the CBAM to third countries should however take into account extra revenues expected from the sale of goods into Europe at higher prices. Once these revenues are factored in, the net cost of the CBAM is reduced to €5.0 billion across all countries under business-as-usual conditions and in the scheme’s current coverage. This goes down to €995 million if exporters do resource shuffling, and to only €715 million (about 0.07% of the value of imports) if all trade partners implemented a €50 carbon price.

Resource shuffling is a way of minimising CBAM costs and sometimes profiting from the scheme. However, such practice does not reduce emissions and could hinder the EU’s efforts in phasing out free allocation in the EU ETS. This may press the EU to change some of the rules to reduce the gains achievable through resource shuffling.

It is therefore not preferable for EU trade partners to build long-term strategies based on resource shuffling. In contrast, implementing carbon pricing makes it possible for third countries to dramatically reduce CBAM costs- and even benefit from the mechanism– while creating real emission reduction incentives. It also makes third country producers indifferent.