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Designing Effective Carbon Border Adjustment with Minimal Information Requirements. Theory and Empirics

Author

Listed:
  • Campolmi, Alessia

    (University of Verona)

  • Fadinger, Harald

    (University of Mannheim and CEPR)

  • Forlati, Chiara

    (University of Southampton)

  • Stillger, Sabine

    (University of Mannheim)

  • Wagner, Ulrich J.

    (University of Mannheim and ZEW)

Abstract

This paper proposes a Leakage Border Adjustment Mechanism (LBAM) as a mechanism to tackle carbon emissions and avoid leakages. It requires no knowledge of embedded emissions and can be applied to all tradable sectors. It implements import tariffs (and, possibly, export subsidies) that sterilize the changes in imports (and exports) induced by a higher EU carbon price.

Suggested Citation

  • Campolmi, Alessia & Fadinger, Harald & Forlati, Chiara & Stillger, Sabine & Wagner, Ulrich J., 2024. "Designing Effective Carbon Border Adjustment with Minimal Information Requirements. Theory and Empirics," Single Market Economics Papers WP2024/19, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.
    • Handle: RePEc:bda:wpsmep:wp2024/19
    DOI: 10.2873/336612
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    Cited by:

    1. Sabine Stillger, 2025. "The Role of Firm Heterogeneity and Intermediate Inputs in Carbon Leakage," CRC TR 224 Discussion Paper Series crctr224_2025_670, University of Bonn and University of Mannheim, Germany.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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