WWZ Auditorium, Erdgeschoss EG, Peter Merian-Weg 6, 4052 Basel
«Border Carbon Adjustments: Curb Your Enthusiasm»
Abstract: Harmonized carbon pricing across borders is hard to achieve, and carbon leakage reduces the cost-effectiveness of unilateral approaches to reduce global emissions. To address this problem, border carbon adjustments (BCAs) apply the domestic carbon price to emissions embodied in traded goods, thereby attempting to „level the playing field“ for emissions-intensive and trade-exposed industries. In this talk I evaluate the environmental and economic impact of border carbon adjustments: leakage reduction, competitiveness restoration, cost-effectiveness, equity and cooperation enhancement. The viability of border carbon adjustment schemes is substantially diminished when legal and practical implementation constraints are taken into consideration. More broadly the talk reflects on the usefulness of simulation models for assessing the policy-relevance of economic narratives.
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