Nominal Adoption or Effective Deductibility? Institutional Readiness for Carbon-Price Recognition under the EU CBAM in Exposed Developing Economies

The European Union’s Carbon Border Adjustment Mechanism (CBAM) allows the certificate obligation on imported goods to be reduced where a carbon price has been effectively paid in the country of origin, converting trade exposure into a fiscal choice akorfabetween retaining carbon revenue domestically and transferring it to the importing jurisdiction. Existing research measures exposure and models aggregate impacts, but treats domestic carbon pricing as a binary attribute. Recognition under CBAM is not binary: it depends on sectoral coverage, on the price effectively paid net of free allocation and rebates, on installation-level monitoring and verification, on the absence of export relief, and on documentary capacity. This paper derives a six-criterion recognition-readiness rubric from Article 9 of Regulation (EU) 2023/956 and applies it through structured document analysis to the sixteen most CBAM-exposed developing and emerging economies, ranked by the World Bank economic exposure index. Readiness is essentially uncorrelated with exposure (Spearman’s rho = -0.05). Six of the sixteen cases, including four of the eight most exposed, have no compliance carbon-pricing instrument at all. Among the ten that do, the effective-price criterion fails in seven: instruments exist but return most of their nominal cost through free allocation or rebates. Adoption is therefore common; effective payment is rare.