A Guide for the Concerned: Guidance on the Elaboration and Implementation of Border Carbon Adjustment

Abstract

When governments take strong unilateral action on climate change they will always consider border carbon adjustment (BCA) as a means to deal with competitiveness and leakage issues. But while this tool appears straightforward, it is plagued by deeply complex problems in practice, including trade law considerations, methodological challenges and consistency with principles such as common but differentiated responsibility. This guidance is the product of a seven-person international expert drafting group that wrestled with those issues and others for over two years. It goes into rare depth on all the issues that policy makers would need to consider in building and implementing a regime of BCA. It also serves as a benchmark by which targeted exporters can assess such schemes.

Keywords: BCA, BTA, border measures, trade, climate change, adjustment, competitiveness, WTO

JEL Classification: F19, K33, Q38