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GTAP Resources: Resource Display

GTAP Resource #6318

"Understanding the potential impacts of border carbon adjustment (BCA) on the Global economy"
by Peters, Ralf, Erwin Corong and Maksym Chepeliev


Abstract
This study incorporates border carbon adjustment (BCA) in GTAP-E. One way to implement BCA is to levy carbon content of imports equal to a country’s carbon price minus the carbon price at the origin country. This adjustment would reduce carbon leakage by discouraging import substitution for carbon-intensive goods and could provide incentive for carbon-intensive countries to reduce carbon content of exports. However, Chen et al. (2020) point out that implementing BCA poses practical, political and implementation challenges. Politically, BCA could be seen by countries as a protectionist, instead of an environmental, measure that could lead to retaliatory measures and eventual disputes at the World Trade Organization (WTO).
Following Chen et al. (2020), we implement the BCA by setting a levy on the carbon content of imports (based on the carbon intensity of the country or origin) equal to the carbon price applied to a country’s (e.g., EU’s) production.
In several scenarios we assess the implications if the EU would impose a BCA.


Resource Details (Export Citation) GTAP Keywords
Category: 2021 Conference Paper
Status: Not published
By/In: Presented during the 24th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2021
Version:
Created: Peters, R. (4/15/2021)
Updated: Peters, R. (4/15/2021)
Visits: 742
- Climate change policy
- Trade and the environment
- Domestic policy analysis
- Multilateral trade negotiations
- Not Applicable


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