Border carbon taxes

Brian R. Copeland

Chapter 3 in Elgar Encyclopedia of International Trade, 2026, pp 13-16 from Edward Elgar Publishing

Abstract: A border carbon tax is a tax on the embodied carbon content of imports. It is a response to the threat of carbon leakage, which is the increase in carbon emissions in the rest of the world caused by home's carbon tax. A carbon tax reduces the competitiveness of domestic carbon-intensive production. This can cause such production to shift to other countries, and for home's imports of carbon-intensive goods to increase. There are two principal motivations for a border carbon tax. One is to preserve the competitiveness of domestic industry (and thereby increase political support for a carbon tax). The other is to reduce foreign pollution. The design of a border carbon tax is complex because of issues of how to deal with lengthy supply chains, measurement of foreign emissions, and the standard effects of tariffs on the global distribution of income.

Keywords: Climate change; Trade and the environment; Carbon emissions; Carbon leakage; Tariffs (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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