Exposure of Chinese Exports to Potential Border Carbon Adjustments

The study finds that potential BCAs by the US and EU would capture only a small fraction of China's total exported emissions, though certain energy-intensive sectors like iron and steel would face significant charges. The impact varies greatly depending on whether charges are based on direct or embodied emissions, with embodied emissions resulting in significantly higher costs. Overall, the authors conclude that such measures would have limited impact on incentivizing total carbon reductions as exporters might divert production to other regions.

• Potential BCA schemes implemented by the United States and European Union would capture a small portion of China's total exported emissions, with the US capturing less than 2% and the EU up to 5%.
• The financial impact of BCAs on Chinese exports is highly sensitive to the carbon price and the assessment methodology; at $20 per tonne, total charges for embodied emissions are four times higher than those for direct emissions.
• The iron and steel sector is among the most exposed to BCAs, with tax rate equivalents reaching 18.9% for the EU and 9.4% for the US when based on embodied emissions at a carbon price of $20 per tonne.
• Total charges payable under combined US and EU schemes would range from US$0.8 billion (based on direct emissions at $20/tCO2) to US$8.6 billion (based on life-cycle emissions at $50/tCO2).
• BCAs are unlikely to significantly incentivize overall carbon emission reductions in China because the value of exports at risk is relatively low—approximately 10% of exports to the US and EU, or 6% of total Chinese exports.
• Chinese exporters may respond to BCAs by diverting carbon-intensive production to other regions rather than paying the carbon charges.
• The use of input-output tables for designing BCA schemes is problematic due to infrequent data updates (every five years) and a lack of detail at the company and product levels.

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} }