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GTAP Resource #6921

"Impact of a EU border carbon adjustment for the Global South"
by Flaig, Dorothee, Lindsay Shutes and Scott McDonald

Combating climate change requires tighter domestic carbon policies; but these increase costs and raise concerns with respect to carbon leakage. Moreover unilateral policies may increase emissions elsewhere while hurting the domestic economy by increasing production costs. Indeed, leakage concerns have been blamed for missing unilateral carbon policies. Against this backdrop, the EU is discussing the introduction of a border carbon adjustment (BCA) to level the playing field between imports and domestic producers. While BCAs are found to be effective in reducing leakage and avoid unfair competition, BCAs are criticised for their burden shifting effect. To analyse these spill over effects on other regions, i.e., the Global South, this study analyses two alternative BCA scenarios as proposed by the European Commission and the European Parliament’s ENVI Committee. The study investigates the relevance of different elements of policy design for third countries and global income distribution.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Created: Flaig, D. (4/14/2023)
Updated: Flaig, D. (4/14/2023)
Visits: 249
- Climate change policy
- Non-Tariff barriers

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