Smart, Low-Carbon, and Competitive: Prioritizing Carbon Border Adjustment Mechanism Readiness Criteria for Free Industrial Zones Using Fuzzy Multi-Criteria Decision-Making Framework

Abstract

The competitiveness of free industrial zones critical nodes in global urban and economic networks is increasingly determined by carbon‑regulated trade, particularly following the European Union’s Carbon Border Adjustment Mechanism (CBAM). While these zones have traditionally relied on spatial and fiscal incentives, CBAM introduces a new competitiveness logic that demands intelligent monitoring systems, digital carbon reporting, and smart low‑carbon infrastructure. This study identifies and prioritizes the key criteria needed for Mediterranean free zones to transition into smart, sustainable industrial hubs capable of competing under CBAM, with particular relevance to Libya. Eight CBAM‑readiness criteria were evaluated: intelligent carbon emissions measurement and reporting, access to smart low‑carbon energy grids, industrial decarbonization capability, digital CBAM compliance support, EU market exposure, green logistics and port decarbonization, financial risk management, and green investment clustering. Using Multi-Criteria Decision-Making model represented by the Fuzzy Criteria Importance Assessment (F‑CIMAS) method with expert linguistic judgments and triangular fuzzy numbers, the results show that Carbon Emissions Measurement and Reporting Readiness which depends heavily on robust data intelligence systems is the most critical criterion, followed by Access to Low‑Carbon Energy. These findings indicate that free zones must prioritize the digital and technical architecture for emissions tracking before broader green investment strategies can succeed. The study contributes to the literature on urban intelligence and sustainable industrial development by shifting the analytical focus from traditional incentives to digitally enabled, CBAM‑ready export platforms.