This brief aims to highlight some of the difficulties involved in elaborating a working BCA regime. It demonstrates both the tensions between the various possible BCA objectives and the necessarily imperfect options that are available for bridging the tension between regime effectiveness and compliance with trade law.
Countries acting unilaterally on climate change may impose costs on their domestic firms that are not borne by their foreign competitors. Some have proposed to deal with this problem by means of border carbon adjustment (BCA) — imposing charges on imports to “level the playing field".
This brief, based on the work of a small group of experts drafting best practice for BCA, highlights some of the more difficult decisions that would have to be made in actually designing such a mechanism.