Is a clash coming when trade and climate meet at the border? The impact of the EU's carbon border adjustment on China's belt and road initiative - Aix-Marseille Université Access content directly
Journal Articles Structural Change and Economic Dynamics Year : 2022

Is a clash coming when trade and climate meet at the border? The impact of the EU's carbon border adjustment on China's belt and road initiative

Jamal Khan
  • Function : Author
Yuan Li

Abstract

We empirically examine the effectiveness of EU Border carbon adjustment (BCA) in the context of BRI, by developing a hypothetical BCA scheme based on a multi-regional Input-Output model. We use various evaluation criteria such as sectoral coverage, economic condition of trade partners, compliance with trade regulations, and selection of Best Available Technology (BAT). Our analysis shows that the EU-BCA scheme covers 44% of the global traded emissions, of which 84% are generated in the BRI regions. However, the BAT principle and trade provisions reduce the coverage of BCA emissions for BRI regions, while assumptions about the carbon intensity of imports result in a further reduction. Our findings both cast serious doubt on BCA's ability to drive industrial decarbonisation and alleviate domestic producers' competitiveness concerns, and support the argument that EU-BCA may level the playing field for the EU's domestic market but may not address competitiveness concerns in other (non-EU) markets.
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Dates and versions

hal-03821161 , version 1 (19-10-2022)

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Jamal Khan, Yuan Li, Eric Girardin. Is a clash coming when trade and climate meet at the border? The impact of the EU's carbon border adjustment on China's belt and road initiative. Structural Change and Economic Dynamics, 2022, 2022-09-23, 63, pp.112-124. ⟨10.1016/j.strueco.2022.09.012⟩. ⟨hal-03821161⟩
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