This discussion paper seeks to analyse the possible consequences or benefits for developing countries of a carbon border adjustment (CBA) that would be levied on goods imported from outside the EU, equivalent with the carbon tax (or price) being applied in the EU. The scope of the analysis is limited, and does not include a systemic critique of our globalised economic model.
The risk of carbon leakage is still being debated in research, i.e. the risk that without the CBA, EU climate regulations might create perverse incentives for more imports from countries outside the EU which might be harming the environment, climate and rights. While we recognise the possible rationale of the CBA from a climate objective perspective, in this paper we do not undertake to assess climate impacts of this tool, which environmental organisations and academia may be best placed to do.
Instead, this paper should be seen as a complementary analysis of socio-economic impacts to accompany analysis from a climate perspective. We are particularly focusing on social justice questions that may arise from a CBA, especially in relation to potential impacts on developing countries.