In the fight against climate change and the rise of greenhouse gas emissions, countries have looked for solutions to slow the increase in carbon output. Now, they are turning to a new system of quantifying and disincentivizing certain goods.
The CBAM, or carbon border adjustment mechanism, is the EU’s attempt at putting a fair price on carbon emissions while preventing carbon leakage. Imposing taxes and tariffs on domestic carbon emitters and importers has been tricky due to a lack of equity. Taxes imposed on domestic companies drove carbon leakage, meaning that it prompted businesses to move their operations to foreign soil to avoid the tax. At the same time, tariffs prescribed to imported goods threatened the WTO’s mandate of equal treatment for foreign and domestic goods.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
