The Role of Border Measures in Unilateral Climate Policy
RFF First Wednesday Seminar
September 5, 2012
About the Event
Issues of competitiveness and emissions leakage have been at the fore of the climate policy debate in all the major economies implementing or proposing to implement significant emissions cap-and-trade programs. While unilateral policy cannot directly impose emissions prices on foreign sources, it can complement domestic emissions pricing with border carbon adjustments to reduce leakage and increase global cost-effectiveness. Theory suggests that border adjustment measures constitute a second-best instrument to complement unilateral emissions pricing. Although border measures have a theoretical efficiency rationale, their practical implementation is subject to serious caveats.
Against this background, panelists at this First Wednesday Seminar highlighted recent research on the efficiency and distributional impacts of border measures, offered design guidelines to ensure their environmental effectiveness while limiting the scope for protectionism, and discussed the implications of such measures for international climate policymaking and negotiations.