Border carbon adjustments result in trade wars, roll back welfare, and disrupt international cooperation on climate policy.
Overland and Huda ’22 (1) Indra Overland is Research Professor and Head of the Center for Energy Research at the Norwegian Institute of International Affairs (NUPI). He did his PhD at the University of Cambridge and has been Associate Professor II at the University of Tromsø,. (2) Mirza is a Lead Researcher at the Climate Change in Southeast Asia Programme at the ISEAS–Yusof Ishak Institute. He is interested in policy-relevant research on energy transition and climate change in Southeast Asia, the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) and cross-border electricity grids in Asia. 9/9/2022, “Climate clubs and carbon border adjustments: a review, “ https://iopscience.iop.org/article/10.1088/1748-9326/ac8da8, (wally)
Studies of carbon border adjustments are marked by divergent views on their effectiveness. Proponents of carbon border adjustments argue that they can enhance the global mitigation effort by generating revenues for sustainable development, incentivising efficiency, and encouraging recalcitrant parties to increase the domestic cost of emissions (Anouliès 2015, Balistreri et al 2018, Bullock 2018, Antón 2020). By contrast, other scholars take a more critical view and argue that carbon border adjustments will be abused for protectionist purposes, resulting in trade wars, generating little welfare and disrupting international cooperation on climate policy (Kuik and Hofkes 2010, Moore 2011, Antimiani et al 2013, 2016, Black 2017). Researchers have compared the effectiveness of carbon border adjustments with rebates for exporters (Fischer 2012, Jakob et al 2013, Böhringeret al 2017a), an international cap and trade system (Hecht and Peters 2019), shared responsibility (Chang 2013) and punitive tariffs (Irfanoglu et al 2015).