ABSTRACT
Since the Paris Agreement does not fix specific obligations, countries will likely implement different emissions reduction policies. The national policies could have a negative impact on competitiveness. The aim of this chapter is to shed some light on this issue by looking at carbon border adjustment measures as a possible solution. After analyzing the challenges of a global solution to climate change, we describe the experience of the European Union (EU) with carbon pricing. Then we focus on different designs of carbon border tax adjustment. Through an exercise applied to the EU, we compare a system based on embodied emissions and a system based on what we call avoided emissions.
