Carbon-motivated border tax adjustment: a proposal for the EU

Paola Rocchi (), Iñaki Arto, Jordi Roca () and Mònica Serrano ()
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Paola Rocchi: Facultat d'Economia i Empresa; Universitat de Barcelona (UB)
Jordi Roca: Facultat d'Economia i Empresa; Universitat de Barcelona (UB)

No 2015/327, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: The analysis focuses on carbon-motivated border tax adjustment (CBTA). CBTA are tariffs applied to imports designed to avoid drawbacks of emission reduction policies when only one or few regions (the abating regions) implement them. Through CBTA the abating regions level out different treatment applied to domestic and imported products. In this paper we focus on CBTA metric. Through a multi-region and multi-sector analysis we compute and compare two possible CBTA systems that the European Union could implement to complement a hypothetical carbon tax applied to domestic products. In one system, tariffs are computed based on the emissions generated abroad to produce the goods imported by the European Union. In the second system, tariffs are based on the emissions that the European Union would have generated to produce domestically the same products. Results at country and sector level contribute to better understand the effects of this instrument and to add information to the political debate on it. Moreover, an important contribution of this analysis is that we explore methodological issues that arise from the use of multi-region and multi-sector models to compute different CBTA metrics.

Keywords: Carbon-motivated border tax adjustmen; European Union; Embodied emissions; Avoided emissions; WIOD database. (search for similar items in EconPapers)
JEL-codes: C67 D57 H23 Q56 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-int
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