October 2nd, 2019
A growing number of scholars, environmentalists, politicians, and business leaders have recommended border carbon adjustments (BCAs) to support domestic climate policies, particularly market-based instruments for carbon pricing. By extending domestic policies beyond a jurisdiction’s boundaries, BCAs can put domestic and foreign industries on a level playing field, counter carbon leakage, and incentivize other jurisdictions to take climate action. In theory, therefore, BCAs offer the promise of environmental, economic, and political benefits. However, BCAs are conspicuously absent in practice. Although an increasing number of carbon pricing policies is being adopted throughout the world, very few examples of BCAs exist, and so far none have been implemented at a general scale in any jurisdiction.
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