A Guide for the Concerned: Guidance on the elaboration and implementation of border carbon adjustment

When governments take strong unilateral action on climate change, they will always consider border carbon adjustment (BCA) as a means to deal with competitiveness and leakage issues.

But while this tool appears straightforward it is plagued by deeply complex problems in practice, including trade law considerations, methodological challenges and consistency with principles such as common but differentiated responsibility. This guidance is the product of a seven-person international expert drafting group that wrestled with those issues and others for over two years. It goes into rare depth on all the issues that policy-makers would need to consider in building and implementing a regime of BCA. It also serves as a benchmark by which targeted exporters can assess such schemes.

Contents include:

Summary of Recommendations

Starting points

What is BCA?

Why apply BCA?

Criteria for judging BCA regime options

Motivations

Scope of applicability

Exemptions

Identifying goods/sectors to be covered

Determining the level and type of adjustment

Assessing the carbon content

Modifications to the adjustment level

Type of adjustment

Pricing the carbon content

The application of BCA to exports

Use of revenues from import adjustments

Other design guidance

Pre-establishment guidance

Operational guidance

Sunset guidance