Akademik Veri Yönetim Sistemi
Economic Change and Restructuring, cilt.59, sa.2, 2026 (SSCI, Scopus)
Concerns over carbon pricing, carbon leakage, and the European Union’s proposed Carbon Border Adjustment Mechanism (CBAM) featured prominently in policy debates at COP28, reflecting growing tensions between regional climate ambition and global trade dynamics. This study contributes to these discussions by empirically examining the unintended consequences of the European Union Emissions Trading System (EUETS) on cross-border carbon flows, specifically focusing on foreign carbon emissions embedded in domestic final demand. Using a balanced panel of 19 Eurozone countries over the period 2005–2020, the analysis integrates advanced econometric techniques including time-varying fixed effects models, Driscoll-Kraay standard errors, and method of moments quantile regression to account for both temporal and distributional heterogeneity. The findings consistently show that although the EUETS has been successful in curbing domestic emissions, it has also contributed to an increase in embodied emissions, suggesting a persistent and intensifying carbon leakage effect. This pattern is particularly evident in the post-2008 period as regulatory stringency increased during Phases II and III of the scheme. Time-varying estimates reveal that the marginal impact of the EU ETS on foreign carbon inflows has grown over time, especially in countries with higher initial levels of embedded carbon. These results highlight the limitations of unilateral climate policy and underscore the need for complementary measures such as CBAM or global climate clubs to prevent carbon outsourcing and uphold the environmental effectiveness of regional market-based mechanisms.