NCEE Seminar: Border Carbon Adjustments Revisited

Virtual Seminar
Washington, DC 20460
United States

Presenter:  Carolyn Fischer, Resources for the Future

Christoph Böhringer, Carolyn Fischer, and Thomas Rutherford

Increasingly it is the case that countries with greenhouse gas mitigation policies are implementing border carbon adjustments (BCA) that is, charges on the carbon embodied in imports from regions without carbon pricing. Given divergent climate policy ambitions across jurisdictions, BCA to foster destination-based carbon pricing have emerged as a salient policy instrument. Competitiveness concerns for energy-intensive industries subjected to increasing CO2 prices have sparked a willingness in climate-ambitious countries to adopt BCA which had been viewed too controversial because of their potential to create trade disputes. The quantitative estimates for BCA impacts differ substantially not only with respect to the magnitude of specific effects but even with respect to their direction. This paper investigates how the economic and environmental effects of BCA policies depend on (i) the input-output data characterizing initial heterogeneities of production, consumption and trade patterns across countries, (ii) the policy design of BCA, and, (iii) structural assumptions on economic responses, in particular with respect to international trade mechanisms.

Note: Hosting these seminars does not necessarily express or imply EPA approval or endorsement of the speaker’s views.

Contact: Ann Wolverton, 202-566-2278 (wolverton.ann@epa.gov)

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