Exposure of Chinese Exports to Potential Border Carbon Adjustments

This research paper evaluates the potential economic impact of Border Carbon Adjustments (BCAs) on Chinese exports, specifically focusing on proposed schemes from the United States and the European Union. Using 2007 input-output tables and IPCC methodology, the authors analyze how different carbon pricing, product coverage, and emission calculation methods (direct vs. embodied) affect the vulnerability of various industrial sectors.

• Border Carbon Adjustments (BCAs) are likely to have a limited effect on incentivizing overall carbon emission reductions in China because the value of exports captured under current proposals is relatively small. The value of exports captured would be approximately "10 per cent of the value of exports from China to these regions, or 6 per cent of the value of total exports from China".
• The financial impact of BCAs varies significantly based on the carbon price and the emission calculation method. At a price of $20/tCO2 based on direct emissions, charges would be approximately $0.8 billion (0.2% of exports to the US and EU). At $50/tCO2 based on life-cycle (embodied) emissions, charges could rise to $8.6 billion (1.8% of exports to those regions).
• The methodology used to assess carbon content drastically changes the resulting charges. When a carbon price of $20 per tonne is applied, the total charges for embodied emissions are "four times those applied for direct emissions".
• The iron and steel sector is among the most exposed to BCAs. With a $20 per tonne carbon price, the average ad valorem tax equivalent for this sector is 3.4% in the US and 8.3% in the EU based on direct emissions; these rates increase to 9.4% in the US and 18.9% in the EU when based on embodied emissions.
• The European Union's potential BCA scheme is more comprehensive than the United States' proposal, capturing a larger share of Chinese exported emissions. Up to 5% of Chinese exported carbon emissions could be captured by an EU BCA, and over one-third of the carbon emissions China exports to the EU may be subject to charges.
• In the United States, the amount of carbon emissions captured by potential BCA schemes is a very small fraction of China's total exported emissions, representing no more than 2% of the total embodied carbon emissions in Chinese exports.
• The study identifies three primary industrial sectors as the largest carbon emitters in China: the smelting and pressing of ferrous metals (20% of total emissions), the manufacturing of raw chemical materials and chemical products (10%), and the manufacturing of non-metallic mineral products (8%).
• The use of input-output tables for designing economy-wide BCA schemes is considered problematic due to infrequent data updates (every five years) and a loss of detail when focusing on subsector levels, which may hinder economic effectiveness and political viability.

APA

Wei, Q., Wooders, P., & Kitson, L. (2012). Exposure of Chinese Exports to Potential Border Carbon Adjustments. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/tricc_exposure_chinese_exports_bca.pdf

Chicago

Wei, Qiu, Peter Wooders, and Lucy Kitson. Exposure of Chinese Exports to Potential Border Carbon Adjustments. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/tricc_exposure_chinese_exports_bca.pdf.

Wikipedia

{{cite report |last1=Wei |first1=Qiu |last2=Wooders |first2=Peter |last3=Kitson |first3=Lucy |title=Exposure of Chinese Exports to Potential Border Carbon Adjustments |publisher=International Institute for Sustainable Development |date=December 2012 |url=https://www.iisd.org/system/files/publications/tricc_exposure_chinese_exports_bca.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wei2012exposure, author = {Wei, Qiu and Wooders, Peter and Kitson, Lucy}, title = {{Exposure of Chinese Exports to Potential Border Carbon Adjustments}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = dec, url = {https://www.iisd.org/system/files/publications/tricc_exposure_chinese_exports_bca.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }