Decarbonizing at the Border: Assessing the Readiness of MENA’s Steel Sector for the EU’s Carbon Border Adjustment Mechanism

The European Union’s Carbon Border Adjustment Mechanism (CBAM) will redefine trade in carbon-intensive goods, posing significant challenges for steel exporters in the Middle East and North Africa (MENA). Addressing a major gap on the region’s exposure to climate-linked trade policy, this study quantifies CBAM-related costs for MENA steel through 2035 by combining life-cycle-assessment-based emission intensities with scenario simulations that incorporate carbon-price trajectories, export elasticities, and emission-reduction pathways. Results show that under high-price scenarios, rising EU ETS prices nearly double regional CBAM costs, while price-responsive exports moderate these effects depending on elasticity. Paris-aligned emission reductions reduce exposure by up to 40 percent by 2035. The integrated scenario—assuming mid-price and mid-elasticity conditions with gradual decarbonization—reveals clear asymmetries: Türkiye remains the largest contributor due to scale, Egypt faces the highest market exposure, and Morocco benefits from cleaner energy use. Overall, the study provides an evidence-based assessment of CBAM exposure under current trade structures, highlighting how production technology and emission profiles shape regulatory vulnerability in an increasingly carbon-conditioned trade environment.