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International climate finance from border carbon cost levelling

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  • Michael Grubb

Abstract

The reality of trying to raise substantial long-term revenues for international climate finance, including the outcome of the High-Level Advisory Group on Climate Change Financing, is revealing the need for fresh thinking on finance sources which takes account of political realities. Particularly after the credit crunch, it will be very difficult to raise all the international finance required from sources that have clear national identity and are presently under the control of finance ministries in the OECD countries. This article argues that the revenue associated with charging for the carbon embodied in the international trade of carbon-intensive commodities is an option with attractive properties. The article explains this option of WTO-compatible 'border carbon cost levelling', indicates potential revenues from its application to key carbon-intensive commodities, and outlines the potential ethical and political economy attractions of the option.

Suggested Citation

  • Michael Grubb, 2011. "International climate finance from border carbon cost levelling," Climate Policy, Taylor & Francis Journals, vol. 11(3), pages 1050-1057, May.
    • Handle: RePEc:taf:tcpoxx:v:11:y:2011:i:3:p:1050-1057
    DOI: 10.1080/14693062.2011.582285
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    References listed on IDEAS

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    1. Ben Lockwood & John Whalley, 2010. "Carbon‐motivated Border Tax Adjustments: Old Wine in Green Bottles?," The World Economy, Wiley Blackwell, vol. 33(6), pages 810-819, June.
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    Cited by:

    1. Miria A. Pigato, 2019. "Fiscal Policies for Development and Climate Action," World Bank Publications - Books, The World Bank Group, number 31051, April.
    2. Springmann, Marco, 2012. "A look inwards: Carbon tariffs versus internal improvements in emissions-trading systems," Energy Economics, Elsevier, vol. 34(S2), pages 228-239.
    3. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2020. "A WTO-compatible Border Tax Adjustment for the ETS to Finance the EU Budget," WIFO Working Papers 596, WIFO.
    4. Jeroen C.J.M. van den Bergh & Arild Angelsen & Andrea Baranzini & W.J. Wouter Botzen & Stefano Carattini & Stefan Drews & Tessa Dunlop & Eric Galbraith & Elisabeth Gsottbauer & Richard B. Howarth & Em, 2018. "Parallel tracks towards a global treaty on carbon pricing," Working Papers 2018/12, Institut d'Economia de Barcelona (IEB).
    5. Pickering, Jonathan & Jotzo, Frank & Wood, Peter J., 2015. "Splitting the difference: can limited coordination achieve a fair distribution of the global climate financing effort?," Working Papers 249508, Australian National University, Centre for Climate Economics & Policy.
    6. Constantin Johnson & Max Åhman & Lars J. Nilsson & Zhenxi Li, 2025. "Emerging green steel markets surrounding the EU emissions trading system and carbon border adjustment mechanism," Nature Communications, Nature, vol. 16(1), pages 1-16, December.
    7. Bhatnagar, S. & Sharma, D., 2022. "Evolution of green finance and its enablers: A bibliometric analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    8. Lamentillo, Anna Mae Yu, 2024. "A price tag on pollution: the case on carbon pricing," LSE Research Online Documents on Economics 122913, London School of Economics and Political Science, LSE Library.
    9. Kasturi Das & Kaushik Ranjan Bandyopadhyay, 2025. "Impact of carbon border adjustment mechanism (CBAM) on steel decarbonization in India: a multi-stakeholder perspective on ambition vs. equity," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 25(2), pages 195-229, June.
    10. Farrahi Moghaddam, Reza & Farrahi Moghaddam, Fereydoun & Cheriet, Mohamed, 2013. "A modified GHG intensity indicator: Toward a sustainable global economy based on a carbon border tax and emissions trading," Energy Policy, Elsevier, vol. 57(C), pages 363-380.
    11. Inglesi-Lotz, Roula & Kuziboev, Bekhzod & Ibadullaev, Ergash & Saidmamatov, Olimjon & Çatık, A. Nazif, 2025. "Energy uncertainty and geopolitical tensions: Impacts on European CO2 emissions," Energy, Elsevier, vol. 337(C).
    12. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2019. "Sustainability-oriented Future EU Funding. A European Border Carbon Adjustment," WIFO Working Papers 587, WIFO.
    13. Katharine Heyl & Felix Ekardt & Paula Roos & Jessica Stubenrauch & Beatrice Garske, 2021. "Free Trade, Environment, Agriculture, and Plurilateral Treaties: The Ambivalent Example of Mercosur, CETA, and the EU–Vietnam Free Trade Agreement," Sustainability, MDPI, vol. 13(6), pages 1-24, March.

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