Potential impacts and challenges of border carbon adjustments

Christoph Böhringer*, Carolyn Fischer, Knut Einar Rosendahl, Thomas Fox Rutherford

*Corresponding author for this work

Research output: Contribution to JournalReview articleAcademicpeer-review

Abstract

Harmonized carbon pricing across borders is hard to achieve in the real world as carbon leakage can reduce the cost-effectiveness of unilateral approaches to reduce global emissions. To address this problem, border carbon adjustments (BCAs) would apply the domestic carbon price to emissions embodied in traded goods, which levels the playing field for emissions-intensive and trade-exposed industries. Here, we review the potential environmental and economic impact of border carbon adjustments on leakage reduction, competitiveness restoration, cost-effectiveness, equity and cooperation enhancement. We find that the viability of border carbon adjustment schemes can be substantially reduced with the current legal and practical implementation constraints.

Original languageEnglish
Pages (from-to)22-29
JournalNature Climate Change
Volume12
Issue number1
DOIs
Publication statusPublished - 2022

Bibliographical note

Publisher Copyright:
© 2022, Springer Nature Limited.

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