Earth:Carbon tariff
A carbon tariff or border carbon adjustment (BCA) is an eco-tariff on embedded carbon.[1][2] The aim is generally to prevent carbon leakage from states without a carbon price.[1] Examples of imports which are high-carbon and so may be subject to a carbon tariff are electricity generated by coal-fired power stations, iron and steel from blast furnaces, and fertilizer from the Haber process.
Currently, only California applies a BCA—for electricity—while the European Union and the United Kingdom will apply BCAs from 2026 and 2027, respectively. Several other countries and territories with emissions pricing are considering them.[3]
Existing and forthcoming
European Union
United Kingdom
California
The California Cap-and-Trade Program has a carbon border adjustment mechanism for imported electricity since 2011,[4] and is required to report to the Legislature in 2025 on a potential extension of border adjustment to physical products.[5]
WTO rule compatibility
Current WTO rules may prohibit some types of carbon border adjustment. In 2024, the United States Democrats (then in government) stated that carbon border adjustment does not amount to a carbon tax but instead to a fee that is permissible under World Trade Organization(WTO) rules,.[6] The WTO itself has not come to a conclusion.[7]
References
- ↑ 1.0 1.1 "What is a Carbon Border Adjustment Mechanism?" (in en-US). https://www.brookings.edu/articles/what-is-a-carbon-border-adjustment-mechanism/#:~:text=A%20Carbon%20Border%20Adjustment%20Mechanism%20(CBAM)%20(also%20known%20as,gases%20emitted%20during%20their%20production..
- ↑ Böhringer, Christoph; Fischer, Carolyn; Rosendahl, Knut Einar; Rutherford, Thomas Fox (January 2022). "Potential impacts and challenges of border carbon adjustments" (in en). Nature Climate Change 12 (1): 22–29. doi:10.1038/s41558-021-01250-z. ISSN 1758-6798. https://www.nature.com/articles/s41558-021-01250-z.
- ↑ "EU's CBAM to spur other countries to introduce carbon border levies: IETA". https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/041824-eus-cbam-to-spur-other-countries-to-introduce-carbon-border-levies-ieta.
- ↑ "California ETS Border Carbon Adjustment". https://lpdd.org/resources/california-ets-border-carbon-adjustment/.
- ↑ California Air Resources Board (CARB) (April 9, 2024). "Regulation for the California Cap on Greenhouse Gas Emissions and MarketBased Compliance Mechanisms 2024 Amendments". https://ww2.arb.ca.gov/sites/default/files/2024-04/nc-Cap-and-Trade_SRIA2024.pdf.
- ↑ "What is a carbon border adjustment mechanism (CBAM) and what are some legislative proposals to make one?" (in en). https://www.jec.senate.gov/public/index.cfm/democrats/2024/2/what-is-a-carbon-border-adjustment-mechanism-cbam-and-what-are-some-legislative-proposals-to-make-one.
- ↑ Porterfield, Matthew C.. "Carbon Import Fees and the WTO". https://clcouncil.org/reports/Carbon_Import_Fees_and_the_WTO.pdf.
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