New Developmentalism and the EU’s Carbon Border Adjustment Mechanism: Policy Options for the Global South

Ikhlas Tawazun; Natasya Dewi Shafira

doi:10.22146/globalsouth.68420

New Developmentalism and the EU’s Carbon Border Adjustment Mechanism: Policy Options for the Global South

https://doi.org/10.22146/globalsouth.68420

Ikhlas Tawazun^(1*), Natasya Dewi Shafira⁽²⁾

(1) University of Indonesia
(2) University of Indonesia
(*) Corresponding Author

Abstract

The Carbon Border Adjustment Mechanism (CBAM), put forward by the European Union (EU), appeared as a new environmental trade policy that holds significance to the Global South. It necessitates the Global South countries to make changes in their development strategies to not only adapt to the CBAM, but to the overall shifting of the world’s economic growth pattern and sustainable development agenda from which it emerged. Against this backdrop, this article addresses how the Global South can adapt to the CBAM in particular and the larger pressure to transition to a more sustainable growth and development. This article uses qualitative methodology with data acquired through extensive desk research. Findings of this article show that new developmentalism is well suited to enhance the needed policy changes as the Global South can leverage its already-existing state capacity to effectively steer the transformation towards a more sustainable growth. This article is also equipped with possible policy options for the Global South as close examinations towards existing development policies of several Global South countries still list several challenges.

Keywords

CBAM; Global South; new developmentalism; environment; sustainable growth

Full Text:

PDF

References

References

Books

Amsden, Alice. (1998). Asia’s next giant: South Korea and late industrialization. Oxford, Oxford University Press.

Chang, Ha Joon. (2002). Kicking away the ladder. London, Anthem Press.

Freeman, C. and Soete, L. (1997). The economics of industrial innovation. Cambridge, MIT Press.

Johnson, Chalmers. (1982). MITI and the Japanese Miracle: the growth of industrial policy 1925-1975. California, Stanford University Press.

Johnson, Chalmers. (1999). The developmental state. California, Cornell University Press.

Schwarz, Adam. (2000). A nation in waiting: Indonesia’s search for stability. Oxford: Westview Press.

Szalavetz, A. (2021). Green industrial policy and development: taking advanced economics over?. In Gerocs, T., and Ricz, J. (eds.). The post-crisis developmental state: perspectives from the global periphery. New York: Palgrave Macmillan.

Wade, Robert. (1990). Economic theory and the role of government in East Asian industrialization. Jersey, Princeton University Press.

Wie, T. (2002). The Soeharto era and after: stability, development and crisis, 1966–2000. In Dick H., Houben V.J.H., Lindblad, J.T, Wie T.K. (ed.). The emergence of a national economy: An economic history of Indonesia, 1800–2000. Crows Nest, NSW: Allen & Unwin.

Report

European Commission Directorate General for Trade. (2021). Client and Supplier Countries of the EU27 in Merchandise Trade (value %) (2020, excluding intra-EU trade). Report. Europe: European Commission. Retrieved from: https://trade.ec.europa.eu/doclib/html/122530.htm

European Parliament. (2017). Human rights in EU trade policy: Unilateral measures applied by the EU. briefing. Retrieved from: https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621905/EPRS_BRI(2018)621905_EN.pdf

Jain, S. (2020). Financing India’s Green Transition. ORF Issue Brief 338, January 2929. Observer Research Foundation.

UNGA. (1987). Report of the World Commission on Environment and Development: Our Common Future, transmitted to the General Assembly as an Annex to document A/42/427 – Development and International Cooperation: Environment; Our Common Future, Chapter 2: Towards Sustainable Development. United Nations: United Nations General Assembly.

International Energy Agency. (2020a). Coal - 2020. Report. Retrieved from https://iea.blob.core.windows.net/assets/00abf3d2-4599-4353-977c-8f80e9085420/Coal_2020.pdf

International Energy Agency. (2020b). Global EV Outlook 2020. Report. Retrieved from https://iea.blob.core.windows.net/assets/af46e012-18c2-44d6-becd-bad21fa844fd/Global_EV_Outlook_2020.pdf

Volz, U. (2018). Fostering Green Finance for Sustainable Development in ASIA. ADBI Working Paper Series 814. Tokyo: Asian Development Bank Institute.

Journal Article (retrieved online, with DOI)

Acemoglu D., Akcigit U., Hanley D., and Kerr, W. (2016) Transition to clean technology. Journal of Political Economy, 124(1): 52-104. doi: 10.1086/684511

Beresford, Quentin. (2001). Developmentalism and its environmental legacy: the Western Australia Wheatbelt, 1990-1990s. Australian Journal of Politics and History, 47(3), 403-414. doi: 10.1111/1467-8497.00236

Bresser-Pereira, L.C. (2020). A New Theoretical Framework: New Developmentalism. Challenge, 1-19. doi: 10.1080/05775132.2019.1705006

Bowles, P. (2020). The Developmental State and the Study of Globalizations. Globalizations 17(8), 1421-1438. doi: 10.1080/14747731.2020.1724245

Chen, G. C., and Lees, C. (2016). Growing China’s renewables sector: a developmental state approach. New Political Economy, 21(6), 574-586. doi: 10.1080/13563467.2016.1183113

Chen Y.S. (2008). The driver of green innovation and green image-green core competence. Journal of Business Ethics, 81(3): 531-543. doi: 10.1007/s10551-007-9522-1

Dent, Christopher. (2017). East Asia’s new developmentalism: state capacity, climate change, and low-carbon development. Third World Quarterly, 1-20. doi: 10.180/01436597.2017.1388740

Doner, R., Bryan, K., and Slater, D. (2005). “Systemic vulnerability and the origins of developmental state: Northeast and Southeast Asia in comparative perspective.” International Organization, 59(2), 327-361. doi: 10.1017/S0020818305050113

Dzonzi-Undi J., Li S. (2016) Policy influence on clean coal uptake in China, India, Australia, and USA. Environmental Progress & Sustainable Energy, 35(3): 906-913. doi: 10.1002/ep.12288

Fang, C., Yang, D. (2008). The political economy of emissions reduction in China: are incentives for low carbon growth compatible?. China’s dilemma: economic growth, the environment, and climate change. Australia, Anu Press.

Figueiredo, J., di Serio, L. Guilhermino, J., de Morais, Wladimir., Neto, V. (2019). Research, development, and transfer of environmentally sound technologies in Brazil. Innovation & Management Review, 16(1), 2-16. doi: 10.1108/INMR-08-2018-0065

Fouré, J., Guimbard, H., and Monjon, S. (2016). Border carbon adjustment and trade retaliation: What would be the cost for the European Union? Energy Economics, 54, 349–362. doi: 10.1016/j.eneco.2015.11.021

Harrell, S., Haddad, M. (2021). The evolution of the East Asian eco-developmental state. The Asia Pacific Journal, 6(1). Retrieved from: https://apjjf.org/-Stevan-Harrell--Mary-Alice-Haddad/5557/article.pdf

Kaneko, S., Managi, S. (2004). Environmental productivity in China. Economics Bulletin, 17(2), 1-10. Retrieved from: https://ideas.repec.org/a/ebl/ecbull/eb-04q20001.html

Kim, SY., Thurbon, E. (2015). Developmental environmentalism: explaining South Korea’s ambitious pursuit of green growth. Politics & Society, 43(2), 213-240. doi: 10.1177/0032329215571287

Maneejuk, N., Ratchakom, S., Maneejuk, P., Yamaka, W. (2020). Does the Environmental Kuznets Curve exist? An international study. Sustainability, 12(21). doi: 10.3390/su12219117

Manners, Ian. (2002). Normative Power Europe: A Contradiction in Terms?. Journal of Common Market Studies 40(2), 235-58

Moutinho, V., Varum, C., Mota, J. (2017). The environment-growth dilemma: new evidence using a panel cointegration approach. Journal of Environmental Economics and Policy. doi: 10.1080/21606544.2017.1383312

Oddell, J. (2001). “Case Study Methods in International Political Economy.” International Studies Perspectives, 2(2), 161-176. doi: 10.1111/1528-3577.00047

Rockström, J., et al. (2009). Planetary boundaries: exploring the safe operating space for humanity. Ecology and Society, 14(2), 472-475. Retrieved from: https://www.nature.com/articles/461472a

Tritto, A. (2020). China’s Belt and Road Initiative: from perceptions to realities in Indonesia’s coal power sector. Energy Strategy Review, 34, 1-11. doi: 10.1016/j.esr.2021.100624

European Union. (2008). Consolidated Version of the Treaty on the Functioning of the European Union. Official Journal of the European Union, C 115, Vol. 51, 47-200

Newspaper Article

Associated Press. (2017, November). VW to spend $40B on electric cars, technology through 2022. AP News. Retrieved from https://apnews.com/article/84d26fa9b0f448a0a2c6c99284d9e0e6

Benoit, Philippe. (2020, September). State-Owned Companies Are Key to Climate Success in Developing Countries, but Are Often Overlooked in the International Dialogue. IPS News. Retrieved from http://www.ipsnews.net/2020/09/state-owned-enterprises-key-climate-success-developing-countries-often-overlooked-international-dialogue/#:~:text=Globally%2C%20government%2Downed%20companies%20,the%20European%20Union%20and%20Japan.

Financial Times. (2021, July). Why a Carbon Border Tax is a Necessity. Financial Times. Retrieved from https://www.ft.com/content/25408d37-79b3-49c9-b767-76e8cac1561a

Periodical Magazine

The Economist. (2021, July). Less than a Jolly Giant. The Economist, p. 32.

Legislation

Act 10,973 of December 2 2004. Dispõe sobre incentivos à inovação e a pesquisa científica e tecnológica no ambiente produtivo e dá outras providências. Retrieved from: http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2004/lei/l10.973.htm

Electronic source

Asia Pacific Energy. (2006). China: 11th Five-Year Plan (2006-2010) for National Economic and Social Development. Retrieved from https://policy.asiapacificenergy.org/node/115

Asia-Pacific Economic Cooperation. (2012). Annex C - APEC List of Environmental Goods. Retrieved from: https://www.apec.org/meeting-papers/leaders-declarations/2012/2012_aelm/2012_aelm_annexc.aspx

Asia-Pacific Economic Cooperation. (2016). APEC Cuts Environmental Goods Tariffs. Retrieved from: https://www.apec.org/Press/News-Releases/2016/0128_EG.aspx

DG Climate Action. (2015). EU ETS Handbook. Retrieved from: https://ec.europa.eu/clima/document/download/8cabb4e7-19d7-45bd-8044-c0dcc1a64243_en?filename=ets_handbook_en.pdf

European Commission. (n.d.). EU Emissions Trading System (EU ETS). Retrieved from: https://ec.europa.eu/clima/policies/ets_en

European Commission. (2019). Communication from the Commission to the European Parliament, The European Council, the Council, The European Economic, Social Committee and the Committee of the Regions - The European Green Deal. Retrieved from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2019%3A640%3AFIN

European Commission. (2021). Proposal for a Regulation of the European Parliament and of the Council Establishing a Carbon Border Adjustment Mechanism. Retrieved from: https://ec.europa.eu/info/sites/default/files/carbon_border_adjustment_mechanism_0.pdf

IESR. (2021). Indonesia Can Achieve Net Zero Emission Before 2070. Retrieved from https://iesr.or.id/en/indonesia-can-achieve-net-zero-emission-before-2070

International Institute for Sustainable Development. (2021). Mapping India’s Energy Subsidies 2021. Retrieved from: https://www.iisd.org/gsi/mapping-india-energy-subsidies-data/sector/renewable/

MNRE. (2013) Phase II of Jawaharlal Nehru National Solar Mission with Viability Gap Funding Support Gets Cabinet Approval. Retrieved from: https://kenbrooksolar.com/solar-benefits-mnre-govt-subsidy

Nachamany, M., Fankhauser, S., Davidová, J., Kingsmill, N., Landesman, T., Roppongi, H., Schleifer, P., Setzer, J., Sharman, A., Singleton, C.S., Sundaresan, J., and Townshend, T. (2015). Climate Change Legislation in Finland, an Excerpt from The 2015 Global Climate Legislation Study. Retrieved from: https://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2015/05/FINLA

Nachamany, M., Fankhauser, S. (2016). The Global Climate Legislation Study - Summary of Key Trends 2016. Report. Retrieved from https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2016/11/The-Global-Climate-Legislation-Study_2016-update.pdf ND.pdf

Sustainable Development Commission. History of Sustainable Development. Retrieved from: https://www.sd-commission.org.uk/pages/history_sd.html#:~:text=The%20concept%20of%20sustainable%20development,more%20sustainable%20pattern%20of%20development.

von der Leyen, Ursula. (2019). A Union that strives for more: My agenda for Europe. Retrieved from https://op.europa.eu/o/opportal-service/download-handler?identifier=43a17056-ebf1-11e9-9c4e-01aa75ed71a1&format=pdf&language=en&productionSystem=cellar&part=

WIPO Green. (2021). Updated Landscape on Expedited Protection of “Green” Inventions in Brazil. Retrieved from: https://www3.wipo.int/wipogreen/en/news/2021/news_0016.html

World Bank. (2019). State and Trends of Carbon Pricing 2019. Retrieved from: https://openknowledge.worldbank.org/bitstream/handle/10986/31755/9781464814358.pdf?sequence=7&isAllowed=y

World Bank. (n.d.). Pricing Carbon. Retrieved from: https://www.worldbank.org/en/programs/pricing-carbon

You, Xiaoying. (2021). China’s 2060 Climate Pledge is ‘Largely Consistent’ with 1.5C Goal, Study Finds. Retrieved from https://www.carbonbrief.org/chinas-2060-climate-pledge-is-largely-consistent-with-1-5c-goal-study-finds

DOI: https://doi.org/10.22146/globalsouth.68420