My price is your cost: CBAMs and the new turn in the commodification of CO2 under CBDR-RC and the WTO’s anti-dumping precedents

Abstract Developed countries are introducing Carbon Border Adjustment Mechanisms (CBAMs) with the aim of combating carbon leakage and promoting a level playing field for their industries by imposing carbon costs on imports equivalent to domestic carbon prices. This article examines CBAMs within the broader context of commodifying CO2, highlighting the historical evolution and current trends in this process. The article argues that CBAMs should be viewed not in isolation but as part of the ongoing commodification of CO2, including establishing a mandatory international CO2 price. Moreover, the article explores the legal complexities and potential conflicts of CBAMs with established principles under international environmental and trade regimes, particularly focusing on the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC) and the World Trade Organization’s (WTO) anti-dumping rules and precedents. By examining the EU's CBAM model and its implications, the article underscores the challenges of imposing a unilateral carbon price and the relationship between WTO precedents on the differences between price and cost for these measures. The study concludes by advocating for a nuanced understanding of CBAMs’ role in the commodification of CO2 and the need for an equitable and legally coherent global approach that takes due consideration of States’ common but differentiated responsibilities towards climate action and the legitimate and evidence-based difference between the international prices of goods and the domestic costs of producing them, when seeking for carbon emissions reduction.