Border Carbon Adjustments: Priorities for international cooperation

This IISD policy brief looks into some of the pertinent design elements of border carbon adjustments that might be fruitful subjects of international discussion about the best ways forward. It also considers the possible venues, formats, and shapes that such a discussion might take.

By Ieva Baršauskaitė, Alice Tipping on August 29, 2023
  • #carbonpricing takes different forms in each country, including both #ETS and #carbontax, making each border carbon adjustment unique—and attempts to harmonize all #BCA impossible. However, certain #BCA elements are the priority for international cooperation, especially as the development of new instruments is underway. #CBAM

  • Following the introduction of #EU #CBAM, new border #carbon adjustment instruments might be on their way. International cooperation will be needed to help governments and businesses navigate through the maze of new regulations. @IISD_News @IBarsauskaite and @AliceTipping highlight priority areas for this work!

  • As business and governments are gearing up for the first phase of implementation of #EU #CBAM, other governments might be developing their own instruments to prevent #carbonleakage. @IBarsauskaite and @AliceTipping take you through some fundamental areas for international cooperation while developing these new trade tools!

Border carbon adjustments (BCAs) have become a point of political tension among governments worldwide. A diversity of BCAs across the globe could also mean an increased uncertainty and additional administrative burden for the traders of covered sectors, many of which (like steel, aluminum, cement, and fertilizers) are key pillars of some developing countries' heavy industry and export revenue streams. Increased cooperation on BCAs holds the potential of not only relieving the tensions in international relations but also significantly facilitating trade for the sectors that are already highly trade exposed. Despite a growing sense that it is a question of when, not if, BCA measures are challenged under the World Trade Organization's dispute settlement system, at the broader strategic level, trade disputes are no substitute for meaningful international discussion on challenging new issues at the intersection of trade and climate change.