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Possible carbon adjustment policies: An overview

Cecilia Bellora () and Lionel Fontagné ()

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Abstract: The new European Commission has announced policies to reduce greenhouse gas emissions drastically. Reaching an ambitious target for a global good – the climate – would require a common price for carbon worldwide. This however clashes with the free-riding problem. Furthermore, unilateral policies are not efficient since they lead to carbon leakages and distort competitiveness. To tackle these issues, the European Union can rely on different policies. Firstly, a carbon pricing of imports can combined with an export rebate to constitute a ‘complete CBA' (Carbon Border Adjustment) solution. Alternatively, a simple tariff at the border can compensate for differences in carbon prices between domestic and imported products. A consumption-based carbon taxation can al so be contemplated. Last, a uniform tariff on imports from countries not imposing (equivalent) carbon policies may help solving the free-riding problem.

Keywords: Carbon Border Adjustment; Climate Change; International Trade; Tariffs (search for similar items in EconPapers)
Date: 2020-04-14
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Published in [Research Report] PE 603.500 - April 2020, European Parliament Directorate-General For External Policies. 2020,

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DOI: 10.2861/012273

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