Possible carbon adjustment policies: An overview

Rapport: 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.

Auteur(s)

Cecilia Bellora, Lionel Fontagné

Date de publication
  • 2020
Mots-clés JEL
F18 Q54 Q56
Mots-clés
  • Carbon Border Adjustment
  • Climate Change
  • International Trade
  • Tariffs
Organisme(s) de délivrance
  • European Parliament Directorate-General For External Policies
Numéro
  • PE 603.500 – April 2020
Pages
  • https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/603500/EXPO_BRI(2020)603500_EN.pdf
Version
  • 1