The EU is assessing new measures to reach their ambitious climate targets, as well as ensuring European competitiveness. This thesis examines a carbon border adjustment mechanism (CBAM) as a supplementary measure to counteract carbon leakage in the EU Emission Trading System. By using the aluminium market, we are assessing the effects an import tariff will have on global emissions and trade exposed industry in Norway compared to the current anti leakage measures. The results are based on an economic equilibrium model, consisting of four producers (Norway, The EU, China and Russia) and two markets; the European market and the world market. The results shows that the design of the import tariff and the combination with other anti leakage measures are of great significance for the producers, but not necessarily for the emission level. Changes in total emissions from the aluminium industry is between -0.1% and 0.7% depending on the composition of the anti leakage policies. The model also shows that the producer facing the highest tariff, withdraws from the European market in all scenarios. Further, the CO2 compensation scheme is critical for European producers, and it will weaken them greatly if the scheme emits from the policy package. We also find that the discontinuation of the compensation might lead to a high leakage rate
