Guidance on Border Carbon Adjustment: Results of the Global Stakeholder Dialogues

This report by the International Institute for Sustainable Development (IISD) provides a set of guidelines for the design and implementation of Border Carbon Adjustment (BCA) regimes. Based on two years of national stakeholder consultations and Global Stakeholder Dialogues, the document offers recommendations to help policy-makers balance climate ambition with the need to avoid trade frictions and regulatory fragmentation.

• BCA regimes should prioritize the use of actual emissions data over default values to ensure accuracy and maintain incentives for clean investment. Default values should only be used when actual data is legitimately inaccessible, and these defaults must be updated regularly and set at a level that motivates the use of actual data without becoming punitive.
• To ensure fairness and prevent double charging, BCA regimes should grant credit for explicit carbon prices—such as carbon taxes and emissions trading systems—effectively paid in the exporting country. The report suggests that the determination of the price actually paid should be a result of government-to-government calculations and discussions rather than the responsibility of importers or producers.
• The scope of emissions covered by a BCA should follow the principle of 'parallel treatment,' meaning it should not exceed the scope of emissions covered by the associated domestic carbon pricing regime. This typically ensures that direct (Scope 1) emissions are always covered, while Scope 2 and certain Scope 3 emissions are covered if domestic producers face corresponding costs.
• The report recommends against blanket country-based exemptions for BCAs, arguing that such measures could lead to carbon leakage, lock countries into high-emission production pathways, and violate WTO most-favoured-nation obligations. Instead, it suggests targeted support for small and medium-sized enterprises (SMEs) through transition periods and dedicated funding.
• There was no consensus among stakeholders regarding whether BCA revenues should be recycled to affected foreign producers or countries. Arguments in favor emphasize compensating for compliance costs and respecting the principle of common but differentiated responsibilities, while arguments against highlight the political viability of domestic carbon pricing and the potential for protectionist perceptions.
• The report found no consensus on whether BCAs should cover exports via rebates. While some argue that export coverage is necessary for the political and economic viability of domestic firms competing in third markets, others warn that it could be viewed as a prohibited subsidy under WTO rules and might incentivize the export of the most GHG-intensive goods.

APA

International Institute for Sustainable Development (n.d.). Guidance on Border Carbon Adjustment: Results of the Global Stakeholder Dialogues. https://www.iisd.org/system/files/2025-07/border-carbon-adjustment-guidance.pdf

Chicago

International Institute for Sustainable Development. Guidance on Border Carbon Adjustment: Results of the Global Stakeholder Dialogues. n.d. https://www.iisd.org/system/files/2025-07/border-carbon-adjustment-guidance.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Guidance on Border Carbon Adjustment: Results of the Global Stakeholder Dialogues |url=https://www.iisd.org/system/files/2025-07/border-carbon-adjustment-guidance.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndguidance, author = {{International Institute for Sustainable Development}}, title = {{Guidance on Border Carbon Adjustment: Results of the Global Stakeholder Dialogues}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/2025-07/border-carbon-adjustment-guidance.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }