Potential impacts and challenges of border carbon adjustments

May combine two claims.

Existing trade policies, although not directly related to climate, affect global emissions: in most countries, import tariff and non-tariff barriers are substantially lower for dirty than for clean industries, which results in an implicit global subsidy to carbon emissions in internationally traded goods.

“It is also worth noting that existing trade policies, although not directly related to climate, affect global emissions: in most countries, import tariff and non-tariff barriers are substantially lower for dirty than for clean industries, which results in an implicit global subsidy to carbon emissions in internationally traded goods 17 .”

• cites [17] 17. Shapiro, J. S. The environmental bias of trade policy. Q. J. Econ. 136, 831-886 (2021). sourceSupported

Probably not a substantial claim: may not pass S2 (checkable).

Cost-effective climate action calls for coordinated, harmonized carbon pricing across jurisdictions worldwide to reduce carbon emissions where abatement is cheapest.

“Cost-effective climate action calls for coordinated, harmonized carbon pricing across jurisdictions worldwide to reduce carbon emissions where abatement is cheapest 2,3 .”

• cites [2] 2. Pearce, D. The role of carbon taxes in adjusting to global warming. Econ. J. 101, 938-948 (1991). sourceNot checked — no full text of the source
• cites [3] 3. Weyant, J. Costs of reducing global carbon emissions. J. Econ. Perspect. 7, 27-46 (1993). sourceSupported

May combine two claims.

Recent economic analyses show that the additional consideration of retaliation significantly reduces the appeal of import adjustments as a means to expand climate coalitions and may even risk a detrimental trade war.

“Recent economic analyses show that the additional consideration of retaliation significantly reduces the appeal of import adjustments as a means to expand climate coalitions and may even risk a detrimental trade war 79,80 .”

• cites [79] 79. Böhringer, C. & Rutherford, T.F. Paris after Trump: An Inconvenient Insight CESifo Working Paper 6531 (CESifo, 2017). sourceSupported
• cites [80] 80. Hagen, A. & Schneider, J. Trade sanctions and the stability of climate coalitions. J. Environ. Econ. Manag. 109, 102504 (2021). sourceSupported

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

Economic research reviewed in this Review Article suggests that the gains from BCA may be limited.

“Economic research reviewed in this Review Article also suggests that the gains from BCA may be limited.”

May combine two claims.

Domestic indirect emissions account for a large share of embodied emissions and for larger differences in emissions intensities across regions.

“Domestic indirect emissions account for a large share of embodied emissions and for larger differences in emissions intensities across regions (Fig. 1).”

May combine two claims.

For 2014, EITE exports of embodied carbon from non-OECD to OECD countries amount to 5.3% of all non-OECD emissions and 7.9% of all OECD production-based emissions.

“For 2014, EITE exports of embodied carbon from non-OECD to OECD countries amount to 5.3% of all non-OECD emissions and 7.9% of all OECD (production-based) emissions, respectively.”

May combine two claims.

Economy-wide CGE studies report much smaller output repercussions of unilateral emissions pricing than industry-specific partial equilibrium studies; the latter sometimes even found that carbon pricing with BCA can lead to a greater output than in the absence of carbon pricing.

“Economy-wide CGE studies, which are less detailed at the industry level, report much smaller output repercussions of unilateral emissions pricing than industry-specific (sectoral) partial equilibrium studies; the latter sometimes even found that carbon pricing with BCA can lead to a greater output than in the absence of carbon pricing 45 .”

• cites [45] 45. Branger, F. & Quirion, P. Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies. Ecol. Econ. 99, 29-39 (2014). sourceNot checked — no full text of the source

May combine two claims.

A common finding of simulation studies is that BCAs level the playing field, and thereby avoid unfair structural change to the detriment of domestic EITE industries.

“A common finding of simulation studies is that BCAs level the playing field, and thereby avoid unfair structural change to the detriment of domestic EITE industries 43,64 .”

• cites [43] 43. Böhringer, C., Balistreri, E. J. & Rutherford, T. F. The role of border carbon adjustment in unilateral climate policy: overview of an Energy Modeling Forum study (EMF 29). Energy Econ. 34, S97-S110 (2012). sourceNot checked — no full text of the source
• cites [64] 64. Fouré, J., Guimbard, H. & Monjon, S. Border carbon adjustment and trade retaliation: what would be the cost for the European Union? Energy Econ. 54, 349-362 (2016). sourceNot checked — no full text of the source

May combine two claims.

Leakage estimates derived from CGE simulations include leakage through the fossil fuel market channel, which tends to dominate leakage through the competitiveness channel unless the global supply of fossil fuels is very price inelastic.

“Leakage estimates derived from CGE simulations include leakage through the fossil fuel market channel, which tends to dominate leakage through the competitiveness channel 9,10,43,50,51 unless the global supply of fossil fuels is very price inelastic 52,53 .”

• cites [9] 9. Felder, S. & Rutherford, T. F. Unilateral CO 2 reductions and carbon leakage: the consequences of international trade in oil and basic materials. J. Environ. Econ. Manag. 25, 162-176 (1993). sourceNot checked — no full text of the source
• cites [10] 10. Burniaux, J. M. & Oliveira-Martins, J. Carbon leakages: a general equilibrium view. Econ. Theor. 49, 473-495 (2012). sourceNot checked — no full text of the source
• cites [43] 43. Böhringer, C., Balistreri, E. J. & Rutherford, T. F. The role of border carbon adjustment in unilateral climate policy: overview of an Energy Modeling Forum study (EMF 29). Energy Econ. 34, S97-S110 (2012). sourceNot checked — no full text of the source
• cites [50] 50. Böhringer, C., Fischer, C. & Rosendahl, K. E. The global effects of subglobal climate policies. B. E. J. Economic Anal. Policy 10, 1-35 (2010). sourceNot checked — no full text of the source
• cites [51] 51. Weitzel, M., Hübler, M. & Peterson, S. Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment. Energy Econ. 34, S198-S207 (2012). sourceNot checked — no full text of the source
• cites [52] 52. Boeters, S. & Bollen, J. Fossil fuel supply, leakage and the effectiveness of border measures in climate policy. Energy Econ. 43, S181-S189 (2012). sourceNot checked — no full text of the source
• cites [53] 53. Böhringer, C., Fischer, C. & Rosendahl, K. E. Cost-effective unilateral climate policy design: size matters. J. Environ. Econ. Manag. 67, 318-339 (2014). sourceNot checked — no full text of the source

Classified as probably not a substantial claim.

A recent analysis of California's greenhouse gas pricing programme predicts that differentiated BCAs to electricity imports will be ineffective in curbing carbon leakage because carbon-free resources from other states may be preferentially dispatched to California.

“A recent analysis of California's greenhouse gas pricing programme predicts that differentiated BCAs to electricity imports will be ineffective in curbing carbon leakage because carbon-free resources from other states may be preferentially dispatched to California 63 .”

• cites [63] 63. Fowlie, M. L., Petersen, C. & Reguant, M. Border carbon adjustments when carbon intensity varies across producers: evidence from California. AEA Papers Proc. 111, 401-405 (2021). sourceNot checked — no full text of the source

May combine two claims.

BCAs face several practical implementation challenges, leading to trade-offs between their effectiveness and compliance with WTO rules.

“BCAs face several practical implementation challenges, leading to trade-offs between their effectiveness and compliance with WTO rules 21,22 .”

• cites [21] 21. Cosbey, A., Droege, S., Fischer, C. & Munnings, C. Developing guidance for implementing border carbon adjustments: lessons, cautions, and research needs from the literature. Rev. Environ. Econ. Policy 13, 3-22 (2019). sourceNot checked — no full text of the source
• cites [22] 22. Bierbrauer, F., Felbermayr, G., Ockenfels, A. Schmidt, K. M. & Südekum, J. A CO 2 Border Adjustment as a Building Block of a Climate Club Kiel Policy Brief 151 (Kiel Institute for the World Economy, 2021).Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

May combine two claims.

Trade in embodied carbon between OECD and non-OECD countries is sizeable, with carbon intensities of EITE products being much higher in non-OECD than in OECD countries.

“To summarize, trade in embodied carbon between OECD and non-OECD countries is sizeable, with carbon intensities of EITE products being much higher in non-OECD than in OECD countries.”

May combine two claims.

Requiring individual data with credible third-party verification is probably achievable for direct emissions, but seems prohibitively expensive-if feasible at all-for indirect emissions, which account for the majority of embodied emissions for most EITE goods.

“Requiring individual data with credible third-party verification is probably achievable for direct emissions, but seems prohibitively expensive-if feasible at all-for indirect emissions, which account for the majority of embodied emissions for most EITE goods.”

May combine two claims.

Among non-OECD countries, China is by far the most important target for import adjustments; among OECD countries, the EU-27 stands to gain the most from export adjustments.

“Among non-OECD countries, China is by far the most important target for import adjustments (Fig. 2); among OECD countries, the EU-27 stands to gain the most from export adjustments (Fig. 3).”

May combine two claims.

Omitting export rebates from the BCA scheme tends to reduce effectiveness because rebates avoid leakage from losing EITE market shares abroad; however, for countries that are large net importers of carbon, most of the leakage mitigation comes from import adjustments.

“Omitting export rebates from the BCA scheme tends to reduce effectiveness because rebates avoid leakage from losing EITE market shares abroad; however, for countries that are large net importers of carbon, most of the leakage mitigation comes from import adjustments 43,53 .”

• cites [43] 43. Böhringer, C., Balistreri, E. J. & Rutherford, T. F. The role of border carbon adjustment in unilateral climate policy: overview of an Energy Modeling Forum study (EMF 29). Energy Econ. 34, S97-S110 (2012). sourceNot checked — no full text of the source
• cites [53] 53. Böhringer, C., Fischer, C. & Rosendahl, K. E. Cost-effective unilateral climate policy design: size matters. J. Environ. Econ. Manag. 67, 318-339 (2014). sourceNot checked — no full text of the source

May combine two claims.

Systematic CGE model cross-comparisons suggest central estimates of leakage rates for industrialized countries that range from 5% to 30%, which reflects different assumptions on the stringency of carbon pricing, the size of the abatement coalition and the magnitude of trade and fossil fuel supply elasticities.

“Systematic CGE model cross-comparisonssuch as the 29th study by the Energy Modeling Forum (EMF) 43 and subsequent meta-analyses of simulation studies [44][45][46] -suggest central estimates of leakage rates for industrialized countries that range from 5% to 30%, which reflects different assumptions on the stringency of carbon pricing, the size of the abatement coalition and the magnitude of trade”

• cites [43] 43. Böhringer, C., Balistreri, E. J. & Rutherford, T. F. The role of border carbon adjustment in unilateral climate policy: overview of an Energy Modeling Forum study (EMF 29). Energy Econ. 34, S97-S110 (2012). sourceNot checked — no full text of the source
• cites [44] 44. Condon, M. & Ignaciuk, A. Border Carbon Adjustment and International Trade: A Literature Review OECD Trade and Environment Working Paper 2013/06 (OECD, 2013). sourceNot checked — no full text of the source
• cites [45] 45. Branger, F. & Quirion, P. Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies. Ecol. Econ. 99, 29-39 (2014). sourceNot checked — no full text of the source
• cites [46] 46. Carbone, J. C. & Rivers, N. The impacts of unilateral climate policy on competitiveness: evidence from computable general equilibrium models. Rev. Environ. Econ. Policy 11, 24-42 (2017). sourceNot checked — no full text of the source

May combine two claims.

Sector-specific simulation studies found leakage rates that range from 20% to 70% for the cement, aluminium and steel industries, which suggests that a significant portion of emissions reductions in domestic EITE production could be offset by increased emissions abroad.

“They found leakage rates that range from 20% to 70% for the cement, aluminium and steel industries, which suggests that a significant portion of emissions reductions in domestic EITE production could be offset by increased emissions abroad 27,54,55 .”

• cites [27] 27. Fowlie, M. L. & Reguant, M. Mitigating emissions leakage in incomplete carbon markets. J. Assoc. Environ. Resour. Econ. https://doi. org/10.1086/716765 (2021). sourceNot checked — no full text of the source
• cites [54] 54. Demailly, D. & Quirion, P. CO 2 abatement, competitiveness and leakage in the European cement industry under the EU ETS: grandfathering versus output-based allocation. Clim. Pol. 6, 93-113 (2006). sourceNot checked — no full text of the source
• cites [55] 55. Ponssard, J. P. & Walker, N. EU emissions trading and the cement sector: a spatial competition analysis. Clim. Pol. 8, 467-493 (2008). sourceNot checked — no full text of the source

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

The risk of trade conflicts largely explains the reluctance to implement border adjustments to date.

“The risk of trade conflicts largely explains the reluctance to implement border adjustments to date.”

May combine two claims.

Firm-specific BCAs are prone to counterproductive 'reshuffling', that is, contractual gaming: on the input side, companies could declare that their less-carbon-intensive inputs are used for the subset of their goods subject to import adjustments; on the output side, emissions-intensive output could be redirected to avoid carbon penalties at the border.

“Firm-specific BCAs are prone to counterproductive 'reshuffling' , that is, contractual gaming: on the input side, akin to profit shifting through transfer pricing, companies could declare that their less-carbon-intensive inputs (for example, renewable energy credits) are used for the subset of their goods subject to import adjustments; on the output side, emissions-intensive output (for example,”

May combine two claims.

In policy practice, BCA raises concerns about legal feasibility and practical implementation.

“In policy practice, however, BCA raises concerns about legal feasibility and practical implementation.”

May combine two claims.

Much of the embodied carbon comes from indirect emissions, which indicates that the practical implementation of BCA can become quite challenging.

“However, much of the embodied carbon comes from indirect emissions, which indicates that the practical implementation of BCA can become quite challenging.”

Probably not a substantial claim: may not pass S2 (checkable), S4 (based).

BCA could be perceived abroad as a form of protectionism.

“BCA could be perceived abroad as a form of protectionism.”

May combine two claims.

BCA creates a level playing field for EITE industries: import adjustments mean that suppliers from countries without domestic carbon pricing also face an increase in carbon costs, so they do not gain an unfair competitive advantage when carbon prices rise.

“BCA creates a level playing field for Emissions Intensive Trade Exposed (EITE) industries: import adjustments mean that suppliers from countries without domestic carbon pricing also face an increase in carbon costs, so they do not gain an unfair competitive advantage when carbon prices rise.”

May combine two claims.

By capturing emissions embodied in traded goods, BCA can reduce leakage through the competitiveness channel and improve the global cost-effectiveness of unilateral action.

“By capturing emissions embodied in traded goods, it can reduce leakage through the competitiveness channel and improve the global cost-effectiveness of unilateral action-the global economic cost to achieve a given reduction in global emissions.”

Probably not a substantial claim: may not pass S4 (based).

Export rebates create competitive neutrality in foreign markets.

“Similarly, export rebates create competitive neutrality in foreign markets.”

May combine two claims.

BCAs are more likely to comply with WTO law if they mirror the domestic obligations; countries need to provide imports with comparable opportunities for compliance, which include surrendering allowances, credits or offsets.

“BCAs are more likely to comply with WTO law if they mirror the domestic obligations; countries need to provide imports with comparable opportunities for compliance, which include surrendering allowances, credits or offsets.”

Classified as probably not a substantial claim.

Leakage through the competitiveness channel occurs when unilaterally regulated carbon-intensive businesses reduce production because of higher operating costs, while production by less regulated manufactures abroad increases.

“Leakage through the competitiveness channel occurs when unilaterally regulated carbon-intensive businesses reduce production because of higher operating costs, while production by less regulated manufactures abroad increases.”

• cites [10] 10. Burniaux, J. M. & Oliveira-Martins, J. Carbon leakages: a general equilibrium view. Econ. Theor. 49, 473-495 (2012). sourceNot checked — no full text of the source

Probably not a substantial claim: may not pass S4 (based). May combine two claims.

Creating country-specific defaults would conflict with WTO national treatment obligations and require recourse to Article XX.

“Creating country-specific defaults would conflict with WTO national treatment obligations and require recourse to Article XX.”

May combine two claims.

Import adjustments are more likely to pass muster than rebates to exports, but import adjustments that discriminate among 'like' products or attempt to regulate foreign production may need to justify themselves based on an Article XX exception-namely, demonstrate that the measures actually increase the environmental effectiveness of unilateral emissions pricing by reducing carbon leakage.

“Import adjustments are more likely to pass muster than rebates to exports, but import adjustments that discriminate among 'like' products or attempt to regulate foreign production may need to justify themselves based on an Article XX exception-namely, demonstrate that the measures actually increase the environmental effectiveness of unilateral emissions pricing by reducing carbon leakage.”

Probably not a substantial claim: may not pass S2 (checkable), S4 (based).

Addressing concerns about unfair competitiveness losses of EITE industries may be a prerequisite for broader socio-economic acceptance of stringent unilateral emissions pricing.

“Addressing concerns about unfair competitiveness losses of EITE industries may be a prerequisite for a broader socio-economic acceptance of stringent unilateral emissions pricing.”

May combine two claims.

An ETS, which can produce equivalent carbon prices, is viewed as a regulatory instrument, for which cross-border reach is typically restricted to product- rather than process-related attributes.

“By contrast, an ETS, which can produce equivalent carbon prices, is viewed as a regulatory instrument, for which cross-border reach is typically restricted to product-rather than process-related attributes.”

Probably not a substantial claim: may not pass S2 (checkable).

The potentially regressive nature of BCA fosters reservations about the broader implications of using them for international climate policy negotiations.

“Clearly, the potentially regressive nature of BCA fosters reservations about the broader implications of using them for international climate policy negotiations.”

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based). May combine two claims.

Alternative instruments to supplement unilateral emissions pricing can be less divisive under WTO rules than BCAs, although they have their own drawbacks.

“The short answer is yes, although they have their own drawbacks.”

May combine two claims.

BCAs reduce the carbon pricing differential between regions with and without emissions pricing, which reduces efficiency losses from non-uniform carbon pricing.

“Effectively, BCAs reduce the carbon pricing differential between regions with and without emissions pricing, which reduces efficiency losses from non-uniform carbon pricing.”

May combine two claims.

As a result of OBR not passing carbon costs sufficiently, the incentives to conserve emissions are weakened and low-carbon substitutes are disadvantaged.

“As a result, the incentives to conserve emissions are weakened and low-carbon substitutes are disadvantaged.”

May combine two claims.

Such sanctions are more likely than BCA to conflict with WTO obligations and induce trade disputes.

“However, such sanctions are more likely than BCA to conflict with WTO obligations and induce trade disputes.”

May combine two claims.

To the extent that import prices decrease to absorb some of the incidence of carbon adjustments, exporting countries subject to BCAs will suffer a loss in export revenues, whereas importing countries benefit from an improvement in their terms of trade.

“To the extent that import prices decrease to absorb some of the incidence of carbon adjustments, exporting countries subject to BCAs will suffer a loss in export revenues, whereas importing countries benefit from an improvement in their terms of trade.”

May combine two claims.

Emissions intensities already vary widely even within industrial sectors, which increases the risk of reshuffling and further limits the scope for global effectiveness gains from BCAs.

“The fact that emissions intensities already vary widely even within industrial sectors 60 increases the risk of reshuffling, which further limits the scope for global effectiveness gains from BCAs.”

• cites [60] 60. Lyubich, E., Shapiro, J. S. & Walker, R. Regulating mis-measured pollution: implications of firm heterogeneity for environmental policy. AEA Papers Proc. 108, 136-42 (2018). sourceNot checked — no full text of the source

May combine two claims.

A single benchmark for import charges based on a default emissions rate fails to reflect the heterogeneity in firm-level emissions intensities and does not provide incentives at the level of foreign firms to abate emissions: the only way for foreign firms to avoid import charges is to reduce exports to countries with BCAs.

“Notably, a single benchmark for import charges based on a default emissions rate fails to reflect the heterogeneity in firm-level emissions intensities 60 and does not provide incentives at the level of foreign firms to abate emissions: the only way for foreign firms to avoid import charges is to reduce exports to countries with BCAs.”

• cites [60] 60. Lyubich, E., Shapiro, J. S. & Walker, R. Regulating mis-measured pollution: implications of firm heterogeneity for environmental policy. AEA Papers Proc. 108, 136-42 (2018). sourceNot checked — no full text of the source

Probably not a substantial claim: may not pass S4 (based).

Unilateral emissions pricing is far from achieving a globally cost-effective outcome-with or without BCAs.

“Unilateral emissions pricing is far from achieving a globally cost-effective outcome-with or without BCAs.”

May combine two claims.

BCA proposals have been floated not only as a measure to combat leakage but also as a means to secure greater cooperation: to avoid tariffs, other nations could adopt equivalent emissions pricing.

“BCA proposals have been floated not only as a measure to combat leakage but also as a means to secure greater cooperation: to avoid tariffs, other nations could adopt equivalent emissions pricing 73,74 .”

• cites [73] 73. Helm, D., Hepburn, C. & Ruta, G. Trade, climate change, and the political game theory of border carbon adjustments. Oxf. Rev. Econ. Policy 2, 368-394 (2012). sourceNot checked — no full text of the source
• cites [74] 74. Al Khourdajie, A. & Finus, M. International environmental agreements and carbon border adjustments. Eur. Econ. Rev. 124, 102405 (2020). sourceNot checked — no full text of the source

Probably not a substantial claim: may not pass S4 (based). May combine two claims.

In international climate negotiations, BCAs could lead countries to reduce their voluntary commitments under the Paris Agreement, which would undermine the strategic value of BCA as a sanctioning instrument.

“In international climate negotiations, BCAs could lead countries to reduce their voluntary commitments under the Paris Agreement, which would undermine the strategic value of BCA as a sanctioning instrument.”

May combine two claims.

Output-based rebating (OBR) means that EITE firms can still reduce their carbon payments by reducing their emissions, but they do not bear the full costs of the remaining embodied emissions, which relieves competitiveness pressures.

“This option, used in the EU, California, Canada and New Zealand, means that firms can still reduce their carbon payments by reducing their emissions, but they do not bear the full costs of the remaining embodied emissions, which relieves competitiveness pressures.”

Probably not a substantial claim: may not pass S3 (load-bearing).

The basic mechanism of burden shifting is well known from the economic theory on optimal tariffs.

“The basic mechanism is well known from the economic theory on optimal tariffs 68 .”

• cites [68] 68. Limão, N. in New Palgrave Dictionary of Economics Online 2nd edn (eds Durlauf, S. N. & Blume, L. E.) (Macmillan, 2008). sourceNot checked — no full text of the source

Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing), S4 (based).

None of the alternatives can address the fundamental free-rider problem in international climate policy.

“None of the alternatives can address the fundamental free-rider problem in international climate policy”

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based). May combine two claims.

Whereas BCAs are controversial under current WTO rules, a similar outcome can be achieved through a domestic rebate-tax scheme that is undoubtedly WTO compatible.

“Whereas BCAs are controversial under current WTO rules, a similar outcome can be achieved through a domestic rebate-tax scheme that is undoubtedly WTO compatible.”

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

Rebating schemes might be preferred by domestic EITE industries with a high share of imported embodied carbon and a strong export orientation, especially if export rebates are not considered feasible.

“At the same time, they might be preferred by domestic EITE industries with a high share of imported embodied carbon and a strong export orientation, especially if export rebates are not considered feasible.”

Probably not a substantial claim: may not pass S3 (load-bearing).

The idea of the behind-the-border approach is to use OBR to address leakage and competitiveness concerns while adding a tax on the consumption of EITE inputs-a tax that applies equally to domestic and imported goods-to send corrected price signals to the consumers.

“The idea is to use OBR to address leakage and competitiveness concerns while adding a tax on the consumption of EITE inputs-a tax that applies equally to domestic and imported goods-to send corrected price signals to the consumers [83][84][85] .”

• cites [83][84][85]Not matched

  Couldn’t be matched to a paper in Crossref, so it can’t be checked.

Probably not a substantial claim: may not pass S3 (load-bearing).

From a practical perspective, the behind-the-border scheme is a straightforward extension of existing regulation, such as the output-based allocation to industries at risk of carbon leakage in the EU ETS.

“From a practical perspective, the scheme is a straightforward extension of existing regulation, such as the output-based allocation to industries at risk of carbon leakage in the EU ETS.”

May combine two claims.

Recent economic research suggests that intensity-based rebates could offer similar protection against leakage and competitiveness losses for EITE industries while lowering the carbon price needed to achieve a given level of emissions reductions.

“Recent economic research suggests that intensity-based rebates could offer similar protection against leakage and competitiveness losses for EITE industries while lowering the carbon price needed to achieve a given level of emissions reductions 86 .”

• cites [86] 86. Böhringer, C., Fischer, C. & Rivers, N. Intensity-Based Rebating Working Paper 21-37 (RFF, 2021). sourceNot checked — no full text of the source

May combine two claims.

The effect of lowering the carbon price needed to achieve a given level of emissions reductions can improve political feasibility and reduce carbon price disparity while promoting a faster clean transition.

“The latter effect can improve political feasibility and reduce carbon price disparity while promoting a faster clean transition.”

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

There are no extra administrative costs in determining the consumption taxes as long as benchmarks for the output-based allocation rates are already set.

“There are also no extra administrative costs in determining the consumption taxes as long as benchmarks for the output-based allocation rates are already set.”

Probably not a substantial claim: may not pass S4 (based). May combine two claims.

The EU and other countries are planning a course towards net-zero emissions, which means fewer allowances will be freely allocated.

“Indeed, the EU and other countries are planning a course towards net-zero emissions, which means fewer allowances will be freely allocated.”

Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

If the EU consultations on carbon border adjustment mechanisms are any indication, industry remains reluctant to give up free allocations, even with border adjustments.

“If the EU consultations on carbon border adjustment mechanisms are any indication, industry remains reluctant to give up free allocations, even with border adjustments.”

May combine two claims.

Like BCA, rebating schemes can address leakage only through the competitiveness channel, and they cannot incentivize abatement efforts of individual firms abroad (as firm-specific carbon adjustments would).

“Like BCA, they can address leakage only through the competitiveness channel, and they cannot incentivize abatement efforts of individual firms abroad (as firm-specific carbon adjustments would).”

Probably not a substantial claim: may not pass S4 (based).

Rebating more to a sector than it is actually incurring in emissions costs is likely to violate the Agreement on Subsidies and Countervailing Measures.

“Meanwhile, rebating more to a sector than it is actually incurring in emissions costs is likely to violate the Agreement on Subsidies and Countervailing Measures.”

Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing), S4 (based).

The risk that rebate-oriented approaches will hinder efforts to achieve multilateral climate cooperation appears low.

“however, the risk that rebate-oriented approaches will hinder efforts to achieve multilateral climate cooperation appears low.”