Carbon border adjustments
Salvation for the EU’s climate trilemma?
Research Paper by Johannes-Christoph Leininger
Border Carbon Adjustments (BCAs) are a policy tool that the European Commission (EC) could potentially use to incentivize third countries to reduce GHG emissions. The BCA would consist in adding levy on top of import tariffs on good, based on product emission intensity benchmarks that reflect the necessary GHG emission pricing to reach the IPCC’s 2℃ pathway. This paper shows that this is the most effective method for incentivizing companies exporting to the EU to invest in low-carbon technologies.