Using National Border Climate Adjustment Schemes to Facilitate Global Greenhouse Gas Management in Industrial Production

Abstract

An appropriately conceived and well-designed border climate adjustment scheme, as a policy mechanism potentially utilizable by many States party to the United Nations Framework Convention on Climate Change, may lead to desirable consequences for the development of comprehensive global greenhouse gas management in furtherance of the Framework Convention's objectives. By creating the conditions for a healthy experimentalism and regulatory competition among the regulating bodies of diverse national markets, the use of origin-neutral border climate adjustment schemes, equivalent to the regulatory climate costs imposed on like domestic products as a condition of market access, may lead to a quicker development of more efficient and ultimately more effective global greenhouse gas management than is likely to be achieved through ex ante international consensus. The proposal is then contrasted with recent important climate border adjustment proposals in the U.S. Congress.

Keywords: climate change, international trade, border climate adjustment, border tax adjustment, climate finance, greenhouse gas, industrial production, GATT, WTO, UNFCCC, national treatment, Article XX, Warner Lieberman, Boucher Dingell, Waxman Markey, American Clean Energy and Security Act

JEL Classification: D4, D61, D62, D73, D78, E23, E61, F02, F13, F15, F19, F23, F42, H41, K23, K32, K33, K34, L5, Q48