Carbon-related Border Adjustment and WTO Law

Carbon-related Border Adjustment and WTO Law

Kateryna Holzer

Carbon-Related Border Adjustment and WTO Law will be of great benefit to policymakers and practitioners working in the area of climate policy and trade regulation. Researchers and advanced students in international economic law and international environmental law will also find much to interest them in this work.

Chapter 11: Summary of main findings

Kateryna Holzer

Subjects: environment, environmental law, law - academic, environmental law, international economic law, trade law


Climate change is primarily caused by an increase in global atmospheric concentrations of greenhouse gases arising from human consumption of fossil fuels and land use practices. Emissions that result from human activities are resources in the economic sense: market mechanisms, such as cap-and-trade and carbon taxation systems, putting a price on emissions and thereby reducing fossil fuel consumption, are a necessary element of the policy response to climate change. At the same time, a proper functioning of market mechanisms of emissions reduction should be secured. Countries that introduce market mechanisms to reduce emissions put their national producers at a competitive disadvantage vis-à-vis their counterparts in nations without such policies in place, and risk experiencing carbon leakage. However, at present, while the carbon price has not yet fully emerged, carbon leakage seems to be more of a political argument supported by domestic industrial lobby groups, rather than one supported by economic evidence. Political considerations are nevertheless strong enough to put the issue of equalizing emissions costs at the border on the agenda in countries with existing or pending emissions reduction systems. The uncertainty associated with reaching a post-Kyoto international climate agreement, as well as the great likelihood that advanced developing countries will be exempted from emissions reduction commitments in a new agreement, and its possible non-ratification by some countries, might provide a further reason to call for carbon equalization systems. In this situation, emissions reducing countries are likely to use carbon-related border adjustment measures (BAMs).

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