The Great Green Wall: Understanding Policy Options for Carbon Border Adjustments

National transitions away from fossil fuels and towards advanced energy sources can be undermined by firms offshoring production to evade carbon taxes or regulations, referred to as “carbon leakage.” To advance these transitions, in lieu of a globally set carbon tax, some policymakers have proposed carbon border adjustments, a type of duty placed on goods that are made in less environmentally restricted countries. This paper seeks to examine the research and proposals for carbon border adjustments and provide a guide for policymakers on the efficacy and design of such border adjustments.