Global Dialogue on Border Carbon Adjustments

The report examines the role of border carbon adjustments (BCAs) in preventing carbon leakage, focusing on stakeholder views from five diverse economies. It analyzes the design of existing mechanisms like the EU and UK CBAMs, explores alternatives to BCAs such as output-based allocation and green industrial policy, and details the challenges faced by exporting nations, including emissions measurement complexities and the need for technology transfers.

• Border carbon adjustments (BCAs) are used to prevent carbon leakage, which occurs when domestic carbon pricing displaces economic activity and greenhouse gas emissions to jurisdictions with less ambitious climate policies.
• Canada faces a high risk of carbon leakage by 2030 in four specific sectors: basic chemicals, fertilizers, pulp and paper, and iron and steel, with a medium risk for cement.
• The EU and UK have implemented or are designing BCAs focusing on upstream products; the EU CBAM covers aluminum, cement, electricity, fertilizers, hydrogen, and iron and steel, while the UK CBAM adds glass and ceramics but excludes electricity.
• Stakeholders in Brazil and Trinidad and Tobago highlighted significant challenges in emissions measurement, specifically the need for the EU to recognize international reporting standards like ISO and the GHG Protocol, and the difficulty of reporting Scope 3 emissions.
• There is a conflict between the current practice of the EU and UK—which allocate BCA revenues to general budgets—and stakeholder preferences in Brazil, Vietnam, Trinidad and Tobago, and the UK, who argue revenues should fund decarbonization.
• Stakeholders in developing nations, particularly Vietnam and Trinidad and Tobago, argue for exemptions based on development level, citing the principle of Common But Differentiated Responsibilities and the historical emissions of the EU and UK.
• Potential policy responses for countries affected by BCAs include accelerating domestic carbon pricing to retain revenue locally, raising awareness through business associations, and challenging the legality of BCAs under WTO or free trade agreements.

APA

Bonnet,, A. (2024). Global Dialogue on Border Carbon Adjustments. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/global-dialogue-border-carbon-adjustments

Chicago

Bonnet,, Antoine. Global Dialogue on Border Carbon Adjustments. International Institute for Sustainable Development, 2024. https://www.iisd.org/articles/deep-dive/global-dialogue-border-carbon-adjustments.

Wikipedia

{{cite report |last1=Bonnet, |first1=Antoine |title=Global Dialogue on Border Carbon Adjustments |publisher=International Institute for Sustainable Development |date=2 August 2024 |url=https://www.iisd.org/articles/deep-dive/global-dialogue-border-carbon-adjustments |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bonnet2024global, author = {Bonnet,, Antoine}, title = {{Global Dialogue on Border Carbon Adjustments}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = aug, url = {https://www.iisd.org/articles/deep-dive/global-dialogue-border-carbon-adjustments}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }