Border Carbon Adjustments (BCAs) are receiving renewed attention as a tool to curb greenhouse gases (GHGs) emitted during goods’ production. BCAs seem to be compatible with WTO rules, hence the main questions revolve around the effectiveness and efficiency of BCAs and their distributional impact, particularly for developing countries.
In this brief we argue that if the European Union adopts BCAs unilaterally, this instrument is likely to be ineffective in bringing down global emissions in the most critical sectors. For example, most steel production is for domestic markets. BCAs efficiency is emissions – are excluded from BCAs they may still be affected through knock-on effects on complex supply chains.
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