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A way forward for a carbon border adjustment mechanism by the EU
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2599-5928
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STG Policy Briefs; 2020/06
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DELBEKE, Jos, VIS, Peter, A way forward for a carbon border adjustment mechanism by the EU, STG Policy Briefs, 2020/06 - https://hdl.handle.net/1814/69155
Abstract
In the context of raising its climate ambition, Europe is thinking of introducing a Carbon Border Adjustment Mechanism (CBAM) on imports. This would be to forestall carbon leakage, whereby European production relocates outside Europe, and is intended to encourage other countries to follow Europe’s lead and raise climate ambition. How this CBAM would work is as yet unclear, although there is a clear wish for the measure to be compatible with World Trade Organisation (WTO) rules. The purpose of CBAM is not to help, nor protect, European industry beyond preventing carbon leakage. In this Policy Brief, the authors make seven clear and pragmatic recommendations on the implementation of this measure if Europe decides to go ahead with it. Misunderstandings are already arising, partly as a result of the declared use of revenues raised. As so often in policymaking, there are trade-offs to be made, and one of the primary recommendations is to engage early with international partners and explore the possibility of acting in unison with others who share the goal of raising climate ambition and are also concerned about potential carbon leakage. A gradual start for the CBAM is also recommended in order to capture the benefits of learning-by-doing.