Work

The UK's border carbon leakage trilemma

Year: 2024

Type: article

Abstract: Concern about manufacturing emissions relocating to places with lax climate regulation has led some countries, including the United Kingdom (UK), to consider, or introduce, carbon pricing on imported products in some sectors. Such regulations, known generically as Border Carbon Adjustments (BCAs), comprise the first mandatory requirements addressing emissions embodied in traded products. Existing analyses have identified BCA design options that minimize its controversial characteristics. In contrast, this article argues that optimization can only serve a subset of identified objectives: BCA design presents a policy trilemma between climate ambition, technical feasibility and international equity. The UK's status as a medium-sized economy proximate to the EU means that following EU BCA design, established through its Carbon Border Adjustment Mechanism (CBAM), will calibrate the UK's level of climate ambition (objective 1) to that of the EU, but lessen technical complexity (objective 2). It will not resolve international equity concerns (objective 3), but help the UK to address them diplomatically. • Border Carbon Adjustment presents a policy trilemma between climate ambition, technical feasibility and international equity. • The UK is confronting this trilemma in its Carbon Border Adjustment Mechanism (CBAM). • Following EU CBAM design will help to address UK climate ambition and technical feasibility concerns.

Source: Energy Policy

DOI: 10.1016/j.enpol.2024.114393

Authors: Emily Lydgate, L. Alan Winters

Institution: University of Sussex

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,650