Work

Decarbonization reduces carbon border costs for Middle East and North African steel exporters

Year: 2026

Type: article

Abstract: The European Union’s Carbon Border Adjustment Mechanism is set to reshape trade in carbon-intensive goods and poses a major challenge for steel exporters in the Middle East and North Africa. Here we show how carbon prices, export responses, cleaner production routes and national power sector transitions shape the region’s exposure through 2035. Our analysis combines life-cycle emissions data with scenarios for carbon pricing, trade, technology adoption and power-sector decarbonization. Under high carbon prices, regional liabilities nearly double by 2035. Lower exports reduce these payments but also cut revenues. Ambitious decarbonization lowers liabilities by up to 56 percent compared with business as usual. The main route to lower exposure differs across countries: cleaner electricity is most important in Egypt and Morocco, while both grid reform and production modernization matter in Algeria and Türkiye. Türkiye has the largest absolute exposure, Egypt has the greatest dependence on the European market, and Saudi Arabia has the highest risk from carbon-intensive production. Carbon border costs for Middle Eastern and North African steel exporters could nearly double under high carbon prices but fall by up to 56% with ambitious decarbonization, with priorities varying across countries, based on scenarios of trade, technology, and power-sector transitions through 2035.

Source: Communications Earth & Environment

DOI: 10.1038/s43247-026-04023-8

Authors: Abdullah Demir, Ali Ersin Dinçer, Nazire Nergiz Dinçer, Ayça Tekin-Koru

Institutions: Abdullah Gül University, TED University

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $3,490