PMCG Report Assesses Georgia’s Readiness for the EU Carbon Border Adjustment Mechanism

PMCG has published a new report examining the potential economic implications of the European Union’s Carbon Border Adjustment Mechanism (CBAM) for Georgia. Prepared for the United Nations Development Programme (UNDP) with financial support from the European Union, the CBAM Report Georgia provides an evidence-based assessment of how the EU’s evolving climate policy may affect the country’s exports, industrial competitiveness, and economic development.

As international trade increasingly incorporates climate considerations, CBAM introduces new reporting requirements and compliance obligations for carbon-intensive products entering the European Union. The report aims to support informed decision-making by assessing Georgia’s level of exposure to these changes and identifying practical measures that can help businesses and policymakers prepare for a low-carbon future.

Assessing Georgia’s Readiness for CBAM

The study combines regulatory analysis, international benchmarking, quantitative economic modelling, and extensive stakeholder consultations to evaluate the potential effects of CBAM on Georgia’s economy. The assessment focuses on sectors covered by the mechanism, including fertilisers, iron and steel, aluminium, and cement, while analysing expected implications for exports, competitiveness, employment, GDP, and sectoral development.

The research also included statistical analysis of trade, production, emissions, and competitiveness indicators, together with more than 40 interviews involving representatives of government institutions, businesses, exporters, industry associations, and experts. This comprehensive approach enabled the project team to identify sector-specific vulnerabilities and develop practical recommendations for strengthening Georgia’s preparedness.

Key Findings of the CBAM Report Georgia

The assessment identifies fertilisers as the sector most exposed to CBAM due to their strong export orientation towards the European Union. Iron and steel producers are also expected to face increasing exposure, while aluminium currently remains comparatively less affected. Although the report concludes that the overall macroeconomic impact on Georgia is likely to remain modest in the short term, it highlights that compliance costs could significantly affect individual industries.

The findings demonstrate that CBAM represents more than a new trade measure. It reflects a broader transformation in global markets, where carbon performance is becoming an increasingly important factor in international competitiveness and market access.