Article
Business, Finance
Michael Keen, Ian Parry, James Roaf
Summary: This paper assesses the rationale, design and impact of border carbon adjustments (BCAs). BCAs are potentially the most effective domestic instrument for addressing carbon pricing disparities and emissions leakage, but design details are critical.
Article
Environmental Sciences
Lewis C. King, Jeroen C. J. M. van den Bergh
Summary: Carbon leakage refers to the phenomenon where emissions are transferred to certain countries due to stricter climate policies in others, potentially undermining the effectiveness of international climate agreements. The Paris Agreement has a greater potential for carbon leakage compared to the Kyoto Protocol, highlighting the need for enhanced policy coordination among countries to address this issue.
Article
Environmental Sciences
Massimo Beccarello, Giacomo Di Foggia
Summary: The effectiveness of the European Emissions Trading System in reducing total emissions and supporting a level playing field is being tested. While it shows a robust impact on the environment with a steady decrease in carbon emissions, there is room for improvement in internalizing emission costs to address the negative impact of extra European generated emissions. The study highlights the competitive advantages and biased production costs associated with higher extra-European imports, emphasizing the need for complementary policy tools to ensure a healthy functioning of the system.
ENVIRONMENTAL RESEARCH COMMUNICATIONS
(2023)
Article
Environmental Sciences
Ann-Kathrin Kuehner, Michael Jakob, Christian Flachsland
Summary: The European Commission's proposed carbon border adjustment mechanism (CBAM) has received substantial support among key stakeholders in Germany, with different groups having divergent views on key design options. Stakeholders from industry generally favor the continuation of free allocation of emissions allowances, while stakeholders from civil society prefer phasing out free allocation and covering all indirect emissions.
ENVIRONMENTAL RESEARCH LETTERS
(2022)
Article
Environmental Studies
Stuart Evans, Michael A. Mehling, Robert A. Ritz, Paul Sammon
Summary: This paper discusses the European Union's consideration of introducing a Border Carbon Adjustment as part of the European Green Deal, highlighting the potential weakening of EU producers' competitiveness in foreign markets by replacing free allocation with an import-only BCA. It also emphasizes the importance of free allocation in safeguarding the overall industrial competitiveness of exported products.
Article
Green & Sustainable Science & Technology
Andy L. Siy, Anzhou Wang, Tingting Zheng, Xian Hu
Summary: There is growing consensus among the international community to combat climate change and promote green and low-carbon development. To address carbon leakage caused by higher industrial production costs from greenhouse gas reduction policies, the EU plans to implement the Carbon Border Adjustment Mechanism (CBAM) in its entirety by 2026, with a pilot phase starting in 2023. This new international trade system driven by climate action, carbon peaking, and carbon neutrality will have a profound impact on China's foreign trade industry. This paper provides policy proposals to address the challenges and consequences of the EU's carbon tariff by analyzing the operation process of the EU CBAM and evaluating its effects on social welfare, carbon emissions, and China's exports through the development of models.
Article
Economics
Francesco Clora, Wusheng Yu, Erwin Corong
Summary: The European Union plans to implement a carbon border adjustment mechanism (CBAM) to address concerns about carbon leakage and competitiveness related to its Green Deal. The effectiveness and compatibility of the CBAM with international trade rules remain uncertain. This study evaluates different designs of the EU CBAM and their impact on global and regional GHG emissions, outputs, and trade flows. The results show significant carbon leakages and output reductions in the EU's emissions-intensive trade-exposed (EITE) sectors under the Green Deal. The design of the CBAM matters, with a non-discriminatory CBAM based on the EU's own emission intensities being ineffective, while an 'aggressive' CBAM based on exporters' emission intensities can achieve the desired goals.
Article
Economics
Basanta K. Pradhan, Joydeep Ghosh
Summary: This paper analyses the impact of the Covid-19 pandemic in India on the economy and climate from the perspectives of sustainability and climate change using a CGE model. The findings suggest that climate policies aligned with the Paris Agreement goals can help with economic recovery, reduce inequality, and lower carbon emissions.
Article
Economics
Lionel Fontagne, Katheline Schubert
Summary: International trade directly affects global greenhouse gas emissions through carbon leakage. Border carbon adjustments (BCA) can alleviate leakage by pricing the embedded carbon in imported products. Designing an effective BCA requires striking a balance between environmental effectiveness, economic competitiveness, technical feasibility, and compatibility with the World Trade Organization.
ANNUAL REVIEW OF ECONOMICS
(2023)
Article
Business
Robert A. Ritz
Summary: This paper examines how a social planner can choose carbon prices in different countries to maximize global welfare. The study finds that optimal carbon prices can be highly asymmetric and competition policy that mitigates market power can enable stronger climate action.
JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT
(2022)
Article
Environmental Sciences
Gaurav Ganti, Matthew J. Gidden, Christopher J. Smith, Claire Fyson, Alexander Nauels, Keywan Riahi, Carl-Friedrich Schleussner
Summary: Addressing equitable contributions to emission reductions is crucial for ambitious global action on climate change within the framework of the Paris Agreement. Developing regions with low historical contributions to global warming have a moral claim to a significant portion of the remaining carbon budget. However, this claim must be assessed in the context of diminishing carbon budget consistent with the long-term temperature goal of the Paris Agreement.
ENVIRONMENTAL RESEARCH LETTERS
(2023)
Article
Economics
Maksym Chepeliev, Israel Osorio-Rodarte, Dominique van der Mensbrugghe
Summary: This paper analyzes the poverty and distributional impacts of different carbon pricing mechanisms and finds that global cooperation can significantly ease the burden on the poor and improve income distribution.
Article
Economics
George Moersdorf
Summary: The proposed carbon border adjustment mechanism by the European Commission aims to reduce carbon leakage and generate substantial revenues. The study suggests that expanding the adjustment scope and providing export rebates can further enhance the effectiveness, but the legal and political risks need to be considered.
Article
Environmental Studies
Laima Eicke, Silvia Weko, Maria Apergi, Adela Marian
Summary: The EU's introduction of the carbon border adjustment mechanism (CBAM) within the European Green Deal has sparked debates on its effectiveness for climate action, adherence to WTO regulations, and potential trade wars with China and the US. The implications of the EU CBAM for affected countries, especially in the Global South, may have been underestimated, with unevenly distributed impacts across the globe. Most countries at relatively high risk are located in Africa, highlighting the need for differentiated policy responses based on individual countries' vulnerabilities.
ENERGY RESEARCH & SOCIAL SCIENCE
(2021)
Article
Economics
David G. Tarr, Dmitrii E. Kuznetsov, Indra Overland, Roman Vakulchuk
Summary: Both empirical results and economic theory suggest that carbon border adjustment mechanisms (CBAMs) will not effectively reduce global carbon emissions, but they can enhance the competitiveness of domestic industries by ensuring imported products bear the same carbon pricing costs. Instead, we propose two complementary approaches, namely a Climate Club where member countries implement a minimum domestic carbon price and impose a tariff surcharge on imports from non-members, and a 0.2% GDP subsidy by high-income countries for transformative research in making green energy more affordable than fossil fuels. We explore various pathways for the Climate Club to comply with the rules of the World Trade Organization, with the exception clause under GATT Article XX being recommended.
Article
Law
Roland Ismer, Harro van Asselt, Jennifer Haverkamp, Michael Mehling, Karsten Neuhoff, Alice Pirlot
Summary: To achieve climate neutrality, carbon emissions in basic material production must be reduced. Support measures adopted by governments must comply with the Agreement on Subsidies and Countervailing Measures. This article analyzes three selected support schemes and finds that the current regime of free allocation may face challenges, while a combination of free allocation and a charge on carbon-intensive materials would ensure consistent carbon pricing and not be considered a subsidy. Carbon contracts for difference could also be designed to avoid conferring benefits and constituting a subsidy.
JOURNAL OF INTERNATIONAL ECONOMIC LAW
(2023)
Article
Economics
Alice Pirlot, Henri Culot
Summary: This article analyzes the potential incompatibility of digital services taxes (DSTs) with World Trade Organization (WTO) law and proposes tax proposals to tackle challenges in the digital economy. While there may be good tax policy reasons to oppose DSTs, arguments based on WTO law provide a relatively weak justification to oppose such taxes.
JOURNAL OF WORLD TRADE
(2021)
Article
Environmental Studies
Timo Gerres, Manuel Haussner, Karsten Neuhoff, Alice Pirlot
Summary: By setting near-zero-emission requirements for products sold in the European single market, the EU can accelerate the phase-out of carbon-intensive production processes, incentivizing the shift to a carbon-neutral society. PCRs represent a new development in technical regulations and can be designed in accordance with WTO law.
REVIEW OF EUROPEAN COMPARATIVE & INTERNATIONAL ENVIRONMENTAL LAW
(2021)
Article
Law
Luc Leboeuf, Alice Pirlot
