GTAP Resources: Resource Display
| GTAP Resource #6318 |
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"Understanding the potential impacts of border carbon adjustment (BCA) on the Global economy" by Peters, Ralf, Erwin Corong and Maksym Chepeliev Abstract This study incorporates border carbon adjustment (BCA) in GTAP-E. One way to implement BCA is to levy carbon content of imports equal to a country’s carbon price minus the carbon price at the origin country. This adjustment would reduce carbon leakage by discouraging import substitution for carbon-intensive goods and could provide incentive for carbon-intensive countries to reduce carbon content of exports. However, Chen et al. (2020) point out that implementing BCA poses practical, political and implementation challenges. Politically, BCA could be seen by countries as a protectionist, instead of an environmental, measure that could lead to retaliatory measures and eventual disputes at the World Trade Organization (WTO). Following Chen et al. (2020), we implement the BCA by setting a levy on the carbon content of imports (based on the carbon intensity of the country or origin) equal to the carbon price applied to a country’s (e.g., EU’s) production. In several scenarios we assess the implications if the EU would impose a BCA. |
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- Climate change policy - Trade and the environment - Domestic policy analysis - Multilateral trade negotiations - Not Applicable |
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Public Access  Paper (117.4 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
