Border vis-à-vis Domestic Carbon Adjustment: Implications of Alternative System Boundary for India to Reduce Carbon Emissions

Suvajit Banerjee

No 333129, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: As a non-obligated signatory to the Kyoto Protocol, India is not entitled with any targeted emission reduction responsibility and therefore frequently blamed by the obligated developed countries from the Annex-B list for its imprudent measures on rampant and random emissions. This paper intends to analyze the impacts and implications of a possible threat from the ‘border carbon adjustment (BCA)’ as an environmental-barrier may be put on by India’s export-partners as against a softer arrangement with ‘domestic carbon adjustment (DCA)’ in India. Besides the spirit of WTO, this instrument of BCA violates the present system boundary on emission reduction responsibility criteria based on territorial production emissions practised by the United Nation Framework Convention on Climate Change (UNFCCC). This study compares the implications of BCA imposition on India’s exports under the present system boundary as against an alternative system boundary based on territorial consumption emissions. The study is methodologically based on a ‘computable general equilibrium (CGE)’ model, following the static approach of ‘Partnership in Economic Policy (Decaluwé et al., 2009)’, however significantly deviating with one respect, this study assumes India as a big importer and has some influence in the pricing decision of its imported items. Since BCA under presently practised system boundary is totally inconsistent, either a ‘consumption-based accounting’ is recommended, to be made fully operational or resistance should be built among the developing countries to oppose this BCA from its implementation.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Date: 2020
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