Supporting the Transition to Climate-Neutral Production: An Evaluation Under the Agreement on Subsidies and Countervailing Measures
Roland Ismer,
Harro van Asselt,
Jennifer Haverkamp,
Michael Mehling,
Karsten Neuhoff and
Alice Pirlot
Journal of International Economic Law, 2023, vol. 26, issue 2, 216-232
Abstract:
To reach climate neutrality, carbon emissions from the production of basic materials need to be curtailed. When governments encourage this transition by adopting support measures, the measures must comply with the Agreement on Subsidies and Countervailing Measures. This article analyzes three selected support schemes under the Agreement on Subsidies and Countervailing Measures: (i) free allocation under emissions trading systems to operators of installations at risk of carbon leakage; (ii) the combination of a charge on carbon-intensive materials with free allocation; and (iii) carbon contracts for difference, under which governments cover the incremental costs of climate-neutral production processes relative to conventional processes. The analysis reveals that the current regime of free allocation is vulnerable to challenges under the Agreement on Subsidies and Countervailing Measures. By contrast, the combination of free allocation and a charge on carbon-intensive materials would ensure consistent carbon pricing and thus would not amount to a subsidy under the Agreement on Subsidies and Countervailing Measures. In a similar vein, the carbon contracts for difference could be designed so that they would not confer a benefit and hence not constitute a subsidy.
Date: 2023
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1093/jiel/jgac058 (application/pdf)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:oup:jieclw:v:26:y:2023:i:2:p:216-232.
Ordering information: This journal article can be ordered from
https://academic.oup.com/journals
Access Statistics for this article
Journal of International Economic Law is currently edited by Kathleen Claussen, Sergio Puig and Michael Waibel
More articles in Journal of International Economic Law from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().