Border Carbon Adjustment and International Trade: A Literature Review

Abstract

The OECD Trade and Environment Working Paper series is designed to make available to a wide readership selected studies by OECD staff or by outside consultants. The views expressed are those of the authors and do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the European Union. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area.

Electric Power Industry: Operational and Public Policy Challenges and Opportunities

“…In other empirical work, Jira and Toffel (2013) analyze under what conditions suppliers are more willing to share their emissions information with buyers in an attempt to reduce emissions throughout the supply chain, Jacobs (2014) shows that voluntary emissions reductions can create shareholder value, while Fabra and Reguant (2014) show that emission costs are almost completely passed through to electricity prices. An important area of discussion in climate policy is carbon leakage and border adjustment (for a review, see Condon and Ignaciuk 2013). Even though climate change policy is getting traction across the globe, the stringency of requirements vary from region to region.…”

“…Climate policy design and implementation Kanudia and Loulou (1998), Jaehn and Letmathe (2010), Zhao et al (2010), Hinz (2011), Chen et al (2011), _ Is ßlegen and Reichelstein (2011), Caro et al (2013), Nyiwul et al (2015), Sunar and Plambeck (2016), _ Is ßlegen et al (2016), Siddiqui et al (2016), Drake et al (2016), Chen and Kettunen (2017), and Drake (2018 Kettunen and Bunn (2016), Chen and Kettunen (2017), and Aflaki and Netessine (2017) Effect of climate policy on production, procurement, facility location and supply chain decisions Gong and Zhou (2013), Krass et al (2013), Cachon (2014), Park et al (2015), 2007), Kroes et al (2012), Jira and Toffel (2013), and Jacobs (2014) Carbon leakage and border adjustments Condon and Ignaciuk (2013), Chen et al (2011), _ Is ßlegen et al (2016), Drake (2018), and Sunar and Plambeck (2016) Effect of climate policy on R&D investment and technology portfolios Shittu (2006, 2008), Bosetti and Tavoni (2009), Solak (2011, 2014), and Shittu (2014 where energy storage is used to reduce the cost of electricity consumed. They derive a dual-threshold type of optimal storage management policy.…”

Mitigation of adverse effects on competitiveness and leakage of unilateral EU climate policy: An assessment of policy instruments

“…Moreover, many observers do not regard border measures as a constructive means of incentivising third countries to engage in climate friendly business; on the contrary, "border measures are likely to trigger retaliatory measures by trading partners" (Eurofer, 2014, p. 58). The BCA policy design also requires determining which goods and sectors to include and how to calculate the amount of CO 2 associated with exports of specific goods: this complexity and the high cost of implementation explain why BCA are almost never adopted (Condon and Ignaciuk, 2013). Therefore, the dynamic efficiency of the BCA instrument is uncertain and depends on its exact design, particularly with respect to the determination of the carbon embodied in products, based on an average, predominant or best available technology (Bednar-Friedl et al, 2012).…”

Variability in Emissions Cost: Implications for Facility Location, Production and Shipping

“…An extensive literature, surveyed in (Condon and Ignaciuk, 2013), examines the impact of a unilateral climate policy in shifting manufacturing and GHG emissions to a region without climate policy. Much of that literature does not address variability in the emissions cost.…”