Climate Policy, Trade and Distribution

ASSESSMENT OF THE ECONOMIC AND ENVIRONMENTAL IMPLICATIONS OF THE CARBON BORDER ADJUSTMENT MECHANISM (CBAM) FOR UZBEKISTAN
The European Union's shift to climate neutrality via its Green Deal has introduced new trade policies, the Carbon Border Adjustment Mechanism
(CBAM) among them. The mechanism will impose a carbon price on certain imports into the EU, focusing on high-emitting-producing countries. This paper examines how Uzbekistan can theoretically be impacted by CBAM, a country with increasing trade relationships with the EU and massive dependence on carbon-emitting industries such as cement, steel, aluminum, and fertilizers. From a combination of quantitative data analysis and qualitative stakeholder interviews from government agencies to business analysts, the research examines the prospective risks along with the game-changing opportunities of CBAM. In the short term, the Uzbek exporters may feel increases in costs and competitiveness issues. But the system can also be an inducer of industrial modernization, carbon reduction, and development of environmental reforms.
Research places emphasis on global cooperation and technical assistance. Helpful data of GIZ and Green Economy Projects in the Ministry of Economy and Finance shows how policy support, finance tools, and institutional capacity building can position Uzbekistan in a position to better prepare to respond appropriately to CBAM.
As a whole, the findings show that not only is CBAM challenging to Uzbekistan but also an opportunity to become part of the world's sustainability agenda and build a more climate-resilient economy. Provided with a proper strategy, investment, and cooperation, Uzbekistan can potentially turn this policy shift into a development opportunity.

Greening the Government Balance Sheet: Policy Achievements and New Challenges from the EU–Mercosur Free Trade Agreement – The Case of Uruguay
Climate change, biodiversity loss, and environmental degradation are increasingly
recognized as sources of macroeconomic and fiscal risk. In response, governments around
the world have begun incorporating environmental considerations into public financial
management, sovereign debt strategies, and public investment decisions. This process,
commonly referred to as "greening the government balance sheet," seeks to recognize
natural capital, climate resilience, and sustainability-related financial assets as
components of national wealth and fiscal sustainability. Uruguay represents one of the
most advanced examples of this transformation in Latin America. Through a successful
renewable energy transition, sustainable forestry policies, innovative sustainability
linked sovereign debt, and the incorporation of green bonds into international reserve
management, Uruguay has positioned itself as a regional leader in sustainable finance.
Simultaneously, the EU–Mercosur Free Trade Agreement creates new opportunities and
challenges for the country's sustainable development strategy. This paper examines
Uruguay's experience in greening the government balance sheet and analyzes how the
EU–Mercosur agreement may affect the country's environmental assets and international competitiveness.
The paper proposes a Green Sovereign Balance Sheet framework composed of five pillars: green public assets, green export
assets, green public liabilities, green financial assets, and future green strategic
investments. The analysis concludes that the EU–Mercosur agreement can increase the
fiscal value of Uruguay's environmental assets, provided that climate adaptation,
governance, and sustainable finance remain central components of
economic policy. Adolfo Sarmiento. Ministry of Foriegn Affaires and Catholic University of Uruguay.
The views expressed in this paper are solely those of the author and should not be attributed to any instition with which the author is affiliated.

The heterogeneous effects of climate policy on households: Evidence from 88 countries
Leonard Missbach and Jan Christoph Steckel (Potsdam Institute for Climate Impact Research, Potsdam, Germany; J.C. Steckel also at Technical University of Munich)

Climate policy imposes highly uneven costs on households, and public acceptance of ambitious mitigation often hinges on whether these costs can be compensated fairly. Most distributional analyses focus on differences between income groups (vertical heterogeneity) while overlooking differences among similarly well-off households (horizontal heterogeneity), leaving compensation policies poorly targeted and climate policy politically fragile. We construct a novel harmonized dataset covering the carbon intensity of consumption of 1.7 million households in 88 countries, representing more than five billion people, 68% of global GDP, and 51% of global CO2 emissions. Using Theil index decomposition, we show that horizontal heterogeneity substantially exceeds vertical heterogeneity in almost all countries. We then apply supervised machine learning (boosted regression trees with SHAP-based feature importance) to identify which household characteristics, beyond income, predict carbon intensity. Household expenditure alone explains only 6% of variation on average; adding features such as vehicle ownership, location, and energy use raises this to 24%, with distinct country-specific patterns summarized in ten descriptive country clusters. Building on these findings, we developed cpic-global.net, an open-access web tool that lets users explore country-specific carbon pricing incidence and design compensation policies tailored to each country's cost drivers, helping governments pursue ambitious emissions reductions while maintaining social and political acceptability.