Template-Type: ReDIF-Paper 1.0
Title: Designing Effective Carbon Border Adjustment with Minimal Information Requirements: Theory and Evidence
Author-Name: Alessia Camplomi
Author-Email:
Author-Name: Harald Fadinger
Author-Email:
Author-Name: Chiara Forlati
Author-Email: 
Author-Name: Sabine Stillger
Author-Email: 
Author-Name: Ulrich J. Wagner
Author-Email: 
Classification-JEL: F13, F64, Q54, Q56
Keywords: Carbon leakage, Carbon Border Adjustment, C02 tax, Trade policy

Abstract: Carbon leakage undermines the effectiveness of unilateral carbon pricing. Taxes on import-embedded emissions, like the EU’s CBAM, prevent leakage but their product
coverage is limited due to strong information asymmetries. We propose an alternative policy (LBAM) that sterilizes carbon leakage without requiring information on foreign
carbon intensities. In a quantitative trade model, LBAM tariffs significantly improve over the EU’s CBAM in terms of global emissions and EU welfare. Importantly,
LBAM avoids large welfare losses among EU trading partners that would result if CBAM were extended to all sectors. Combining LBAM tariffs with equivalent export
subsidies reinforces these advantages.

Note: 
Length: 69
Creation-Date: 2024-01
Revision-Date: 2025-07
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp495
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_495v3