Border carbon adjustments: Addressing emissions embodied in trade

Marco Sakai*, John Barrett

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Approximately one fourth of global emissions are embodied in international trade and a significant portion flows from non-carbon-priced to carbon-priced economies. Border carbon adjustments (BCAs) figure prominently as instruments to address concerns arising from unilateral climate policy. Estimating the volume of emissions that could be potentially taxed under a BCA scheme has received little attention until now. This paper examines how a number of issues involved in the implementation of BCAs can affect their ability to cover emissions embodied in trade and thus address carbon leakage. These issues range from ensuring compliance with trade provisions and assumptions on the carbon intensity of imports, to determining which countries are included and whether intermediate and final demand are considered. Here we show that the volume of CO2 captured by a scheme that involved all Annex B countries could be significantly reduced due to these issues, particularly by trade provisions, such as the principle of 'best available technology' (BAT). As a consequence, the tariff burdens faced by non-Annex B parties could dwindle considerably. These findings have important policy implications, as they question the effectiveness and practicalities of BCAs to reduce carbon leakage and alleviate competitiveness concerns, adding further arguments against their implementation.

Original languageEnglish
Pages (from-to)102-110
Number of pages9
JournalEnergy policy
Publication statusPublished - 1 May 2016


  • Best available technology
  • Border carbon adjustments
  • Carbon leakage
  • Embodied emissions
  • GHG emissions
  • International trade

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