Exposure Of Chinese Exports To Potential Border Carbon Adjustments: IISD Publications

Jul 5, 2011 | Corporate Member News

Wei Qiu, Lucy Kitson, Peter Wooders, IISD, 2011. Paper, 6 pages, copyright: IISD

As growth in trade continues to outstrip growth in GDP, attention has been directed to the CO2 emissions that are embedded in traded goods and the interaction with carbon pricing policies. In particular, concern has been raised that by implementing carbon prices, a country increases the cost of domestic production relative to imported goods, and in doing incentivizes changes in trade and / or production patterns to the detriment of domestic industry. It is possible that such changes could in turn lead to carbon leakage, as emissions reductions in the CO2 constrained region are offset by increased emissions elsewhere.

In response, it has been suggested that given uneven implementation of carbon pricing policies, those countries that do choose to implement such measures would be advised to try and limit the distortions in consumption and production that arise from the resultant cost asymmetries. BCAs, which require payment of a tax or purchase of emissions certificates in line with carbon content of imports, are one such measure.

This brief quantifies the impact of existing proposals for BCAs on exports from China. It shows that not only are there many uncertainties regarding design detail, but also that these uncertainties can have a significant impact on the exposure of exports. Previous studies highlight that the products included, the CO2 price applied, and the method for assessing the CO2 content, are of key importance. These three considerations form the basis of the analysis. 

Access the report here.

About the International Institute for Sustainable Development 

The world is challenged by a changing climate, biodiversity loss, abject poverty and environmental degradation. What can make a difference? Good ideas. Creativity. Passion. Innovation. The achievement of change. 

IISD is in the business of promoting change towards sustainable development. As a policy research institute dedicated to effective communication of our findings, we engage decision-makers in government, business, NGOs and other sectors in the development and implementation of policies that are simultaneously beneficial to the global economy, the global environment and to social well-being. 

In the pursuit of sustainable development, we promote open and effective international negotiation processes. And we believe fervently in the importance of building our own institutional capacity while helping our partner organizations in the developing world to excel. 

Established in 1990, IISD is a Canadian-based not-for-profit organization with a diverse team of more than 150 people located in more than 30 countries. Through our dynamic portfolio of projects, we partner with more than 200 organizations throughout the world. To learn more about our history, please visit the IISD Timeline. 

Click here to learn more about our project work and programs, which are guided by our strategic institutional directions. And please visit our IISD Linkages site to follow our coverage of international negotiations on environment and development. 

IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Development Research Centre (IDRC) and Environment Canada, and from the Province of Manitoba. The Institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the private sector.

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