Abstract The European Union (EU)’s trade and climate policy frameworks face a challenge in harmonizing the Renewable Energy Directive (RED) III and the Carbon Border Adjustment Mechanism (CBAM). Both acts aim to reduce greenhouse gas emissions but diverge in their treatment of Guarantees of Origin (GO), which are central to RED III for certifying renewable energy. CBAM, in contrast, relies on location-based emissions calculations and disregards GOs. This divergence entails questions about policy effectiveness and international trade implications, particularly regarding compliance with World Trade Organization law and the potential for trade disputes. The inconsistency between RED III and CBAM could undermine the EU’s climate objectives and hinder global renewable energy investments. This article examines the impact of these discrepancies on environmental law, trade practices, and multinational corporations, and emphasizes the need for a balanced approach that aligns RED III and CBAM while addressing verification challenges. The ultimate goal is to achieve synergy between these policies, advancing the EU’s climate agenda and ensuring fair global trade practices.
Marcin Menkes (Sun,) studied this question.