Trade and Climate Change: Focus on Carbon Leakage, Border Carbon Adjustments and WTO Consistency

2018 ◽  
Vol 12 (1) ◽  
pp. 1-108 ◽  
Author(s):  
ZhongXiang Zhang
Keyword(s):  
Climate Change ◽  
Carbon Leakage

Comments: Carbon Tariffs - Fair Incentives for Change?

2021 ◽  
Vol 73 (05) ◽  
pp. 8-8
Author(s):  
Pam Boschee
Keyword(s):  
Climate Change ◽  
Climate Policy ◽  
Global Climate ◽  
Carbon Price ◽  
Carbon Leakage ◽  
Carbon Taxes ◽  
Trading Systems ◽  
Climate Policies ◽  
The Eu ◽  
Carbon Tariff

Carbon credits, carbon taxes, and emissions trading systems are familiar terms in discussions about limiting global warming, the Paris Agreement, and net-zero emissions goals. A more recent addition to the glossary of climate policy is “carbon tariff.” While the concept is not new, it recently surfaced in nascent policymaking in the EU. In 2019, European Commission President Ursula von der Leyen proposed a “carbon border adjustment mechanism (CBAM)” as part of a proposed green deal. In March, the European Parliament adopted a resolution on a World Trade Organization (WTO)-compatible CBAM. A carbon tariff, or the EU’s CBAM, is a tax applied to carbon-intensive imports. Countries that have pledged to be more ambitious in reducing emissions—and in some cases have implemented binding targets—may impose carbon costs on their own businesses. Being eyed now are cross-border or overseas businesses that make products in countries in which no costs are imposed for emissions, resulting in cheaper carbon-intensive goods. Those products are exported to the countries aiming for reduced emissions. The concern lies in the risk of locally made goods becoming unfairly disadvantaged against competitors that are not taking similar steps to deal with climate change. A carbon tariff is being considered to level the playing field: local businesses in countries applying a tariff can better compete as climate policies evolve and are adopted around the world. Complying with WTO rules to ensure fair treatment, the CBAM will be imposed only on high-emitting industries that compete directly with local industries paying a carbon price. In the short term, these are likely to be steel, chemicals, fertilizers, and cement. The Parliament’s statement introduced another term to the glossary of climate policy: carbon leakage. “To raise global climate ambition and prevent ‘carbon leakage,’ the EU must place a carbon price on imports from less climate-ambitious countries.” It refers to the situation that may occur if businesses were to transfer production to other countries with laxer emission constraints to avoid costs related to climate policies. This could lead to an increase in total emissions in the higher-emitting countries. “The resolution underlines that the EU’s increased ambition on climate change must not lead to carbon leakage as global climate efforts will not benefit if EU production is just moved to non-EU countries that have less ambitious emissions rules,” the Parliament said. It also emphasized the tariff “must not be misused to further protectionism.” A member of the environment committee, Yannick Jadot, said, “It is a major political and democratic test for the EU, which must stop being naïve and impose the same carbon price on products, whether they are produced in or outside the EU, to ensure the most polluting sectors also take part in fighting climate change and innovate towards zero carbon. This will give us the best chance of remaining below the 1.5°C warming limit, whilst also pushing our trading partners to be equally ambitious in order to enter the EU market.” The Commission is expected to present a legislative proposal on a CBAM in the second quarter of 2021 as part of the European Green Deal.

scholarly journals The risk of carbon leakage in global climate agreements

2020 ◽  
Author(s):  
Tobias Nielsen ◽  
Nicolai Baumert ◽  
Astrid Kander ◽  
Magnus Jiborn ◽  
Viktoras Kulionis
Keyword(s):  
Climate Change ◽  
Kyoto Protocol ◽  
Global Climate ◽  
Developed Countries ◽  
Carbon Leakage ◽  
Policy Makers ◽  
Climate Agreements ◽  
Climate Action ◽  
The Usa ◽  
Nationally Determined Contributions

Abstract Although climate change and international trade are interdependent, policy-makers often address the two topics separately. This may inhibit progress at the intersection of climate change and trade and could present a serious constraint for global climate action. One key risk is carbon leakage through emission outsourcing, i.e. reductions in emissions in countries with rigorous climate policies being offset by increased emissions in countries with less stringent policies. We first analyze the Paris Agreement’s nationally determined contributions (NDC) and investigate how carbon leakage is addressed. We find that the risk of carbon leakage is insufficiently accounted for in these documents. Then, we apply a novel quantitative approach (Jiborn et al., 2018; Baumert et al., 2019) to analyze trends in carbon outsourcing related to a previous international climate regime—the Kyoto Protocol—in order to assess whether reported emission reductions were offset by carbon outsourcing in the past. Our results for 2000–2014 show a more nuanced picture of carbon leakage during the Kyoto Protocol than previous studies have reported. Carbon outsourcing from developed to developing countries was dominated by the USA outsourcing to China, while the evidence for other developed countries was mixed. Against conventional wisdom, we find that, in general, countries that stayed committed to their Kyoto Protocol emission targets were either only minor carbon outsourcers or actually even insourcers—although the trend was slightly negative—indicating that binding emissions targets do not necessarily lead to carbon outsourcing. We argue that multiple carbon monitoring approaches are needed to reduce the risk of carbon leakage.

scholarly journals Climate Policy and the United States System of Divided Powers: Dealing with Carbon Leakage and Regulatory Linkage

2013 ◽  
Vol 3 (1) ◽  
pp. 31-55 ◽  
Author(s):  
Daniel A. Farber
Keyword(s):  
Climate Change ◽  
United States ◽  
Environmental Protection Agency ◽  
Policy Making ◽  
Separation Of Powers ◽  
The United States ◽  
Executive Branch ◽  
Carbon Leakage ◽  
Foreign Affairs ◽  
State Governments

AbstractClimate change has pushed governmental authorities within the United States (US) into new routes of national and transnational policy-making. The normal route for national policy-making runs from Congress in setting policy, to the President in agency implementation, to judicial oversight and enforcement. When that route is blocked, however, federalism and the separation of powers provide some byways and detours that may still be used to make progress. State governments and the executive branch have moved into the breach left by congressional deadlock. In the absence of federal climate legislation or a formal treaty, however, constitutional challenges will predictably meet efforts to limit carbon leakage or to establish linkages between regulatory systems.These constitutional issues often involve corners of constitutional law such as foreign affairs, where doctrines are particularly murky. Solid arguments can be made in favour of state efforts to avoid leakage and create linkage, despite claims of discrimination against interstate commerce, extraterritoriality, and foreign affairs pre-emption. The Environmental Protection Agency has some statutory authority to deal with leakage, and the President seems to have authority to pursue linkage through executive agreement. Thus, both states and the executive branch should have room to deal with transboundary implications of climate policies. Although the deadlock in Congress regarding climate change may be unusually severe, these modes of response may also be important for other kinds of transnational activity by US state governments and the national executive.

scholarly journals Adaptation to climate change: how does heterogeneity in adaptation costs affect climate coalitions?

2016 ◽  
Vol 21 (6) ◽  
pp. 812-838 ◽  
Author(s):  
Itziar Lazkano ◽  
Walid Marrouch ◽  
Bruno Nkuiya
Keyword(s):  
Climate Change ◽  
Developing Countries ◽  
International Environmental Agreements ◽  
Free Riding ◽  
Carbon Leakage ◽  
Adaptation To Climate Change ◽  
Policy Makers ◽  
Common View ◽  
Cost Differences ◽  
Adaptation Costs

AbstractAdaptation costs to climate change vary widely across countries, especially between developed and developing countries. Adaptation costs also influence a country's decision to abate and join international environmental agreements (IEAs). In this paper, the authors study how these cost differences affect participation incentives. Their model identifies two channels through which adaptation affects free-riding incentives: carbon leakage and cost asymmetry in adaptation. In contrast with the common view, the authors find that the presence of adaptation is not necessarily an impediment to cooperation on abatement. They also present conditions under which adaptation can strengthen or weaken free-riding incentives. The results serve as a cautionary tale to policy makers and suggest that policies directed at reducing carbon leakage and/or cost differences between developed and developing countries may also affect the success and failure of IEAs.

Rebuild America Clean and Green

2009 ◽  
Vol 19 (2) ◽  
pp. 149-156
Author(s):  
Leo W. Gerard
Keyword(s):  
Climate Change ◽  
Carbon Leakage ◽  
Emissions Reductions ◽  
Domestic Industry ◽  
Climate Change Policies

The testimony of International President Leo Gerard of the United Steelworkers before a House subcommittee on trade in March addressed how to minimize “carbon leakage” between nations—when emissions reductions in one country lead to increased emissions in another that has strict climate change policies—in a manner that will sustain existing U.S. jobs and keep domestic industry competitive.

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