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Border adjustment measures as a climate protection instrument

by Dr. Sophie Gappa

Without the conclusion of a climate agreement that is binding under international law, all forms of pricing of carbon dioxide emissions are unilateral individual actions. Such actions entail risks for the so-called pioneer states: The internalisation of emission costs increases the national price level. A reaction to this cost pressure can be the relocation of production and emissions to countries with lower climate protection levels (so-called carbon leakage). However, taking on a pioneering role can be risky not only from the point of view of climate protection, but also from competition policy considerations: The cost disadvantages can lead to a reduction in the competitiveness of regulated industries on international markets. The instrument of border tax equalisation addresses these problem points and aims to create a so-called level playing field.

This paper examines the admissibility of border adjustment measures under international trade law and examines the extent to which this instrument can be used for the purpose of climate protection. In this context, the paper deals with the interplay between the regimes of world trade and climate law.

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