The carbon border adjustment trilemma

Lydgate, Emily (2021) The carbon border adjustment trilemma. Other. UKTPO.

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Abstract

• As countries move to achieve net-zero targets there is a risk their industries will relocate to countries where emitting CO2 is cheaper and easier.

• An option for addressing this so-called carbon leakage is applying domestic carbon prices to imported products, or Carbon Border Adjustment (CBA). Both the UK and US are considering CBA and the EU has committed to introducing it.

• It’s still unclear how exactly CBA will be designed and the EU Commission will publish a proposal in July.

• CBA design offers up a trilemma between the policy goals of environmental ambition, technical feasibility and fairness.

• This trilemma means that there is no optimal solution for CBA design, but rather trade-offs between goals.

• CBA also gives rise to the need for new forms of trade and climate cooperation to determine which other countries or producers have equivalent pricing, and therefore should be exempted. This might mean simply agreeing broad shared aims, such as net-zero targets, or much more detailed sector-specific analysis.

• The upcoming G7 and COP, both hosted by the UK, provide an opportunity to make progress on these crucial questions for designing CBA and forming a larger transatlantic climate alliance.

Item Type: Reports and working papers (Other)
Additional Information: Briefing paper 56
Schools and Departments: School of Law, Politics and Sociology > Law
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 01 Oct 2021 10:06
Last Modified: 02 Mar 2022 12:32
URI: http://sro.sussex.ac.uk/id/eprint/102016

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Project NameSussex Project NumberFunderFunder Ref
UKRI C19 Extension Fund (Title: Post-Brexit trade and investment: explaining the issues, formulating trade agreements and understand)G3149UNIVERSITY OF SUSSEXUnset