Publication

This publication analyzes border carbon adjustments (BCA) as a measure to reduce the negative impacts on competitiveness and to induce lower leakage rates. BCAs would require foreign producers importing into a country with carbon pricing to either buy carbon allowances or to pay a price for the embodied CO2 emissions at the border. However, given the limited efficiency gains and leakage reduction, the authors do not consider BCAs as an instrument of choice in international climate policy.