Implementing Carbon Tariffs: A Fool’s Errand?

Abstract The absence of a global treaty on climate change abatement raises the chances that jurisdictions across the world will adopt substantially different approaches to greenhouse gas emissions. This further increases the possibility that some governments might consider taxes on imports based on carbon content from countries that have not introduced similarly restrictive climate change policies. Such border taxes certainly appeal to domestic industries facing higher charges for their own carbon emissions. This research demonstrates that there are enormous practical difficulties surrounding such plans. Various policies are evaluated based on the following constraints: adherence to World Trade Organisation compliance, administrative plausibility, help in meeting environmental goals and ability to deal with domestic pressures. The steel industry is used as a case study in this analysis. All considered policies arguably fail to meet at least one of these constraints, bringing into question the plausibility that a carbon border tax can be practical policy.