Saving face and facing climate change: Are border adjustments a viable option to stop carbon leakage?

This article argues that imposing a carbon tariff on imports from the EU’s trading partners could deliver tangible climate results but would also provoke strong trade repercussions. Ideally, the implementation of the Paris Agreement remains the best solution for the planet. But ambitious domestic climate policy in the absence of an international commitment to reduce carbon emissions puts the EU at a competitive disadvantage. While continuing its leadership on climate action, the EU has addressed the threat of displacing its production and its emissions elsewhere by subsidising European industry with carbon credits, an approach which has had unconvincing results. Carbon border adjustments could be a controversial but better option.