2023碳边界调整：设计要素、选择和政策决定报告（英文版）-RESOURCES FUTURE

CarbonBorderAdjustments:

DesignElements,Options,andPolicyDecisions

RaymondKopp,WilliamPizer,andKevinRennert

Report23-14

October2023

AbouttheAuthors

RaymondKoppisaseniorfellowatResourcesfortheFuture(RFF).HeholdsPhD

andMAdegreesineconomicsandanundergraduatedegreeinfinance.HehasbeenamemberoftheRFFresearchstaffsince1977andhasheldavarietyofmanagementpositionswithintheinstitution.Kopp’sinterestinenvironmentalpolicybeganin

thelate1970s,whenhedevelopedtechniquestomeasuretheeffectofpollution

controlregulationsontheeconomicefficiencyofsteamelectricpowergeneration.HethenledthefirstexaminationofthecostofmajorU.S.environmentalregulationsinafull,generalequilibrium,dynamiccontextbyusinganapproachthatisnow

widelyacceptedasstate-of-the-artincost-benefitanalysis.DuringhiscareerKopphasspecializedintheanalysisofenvironmentalandnaturalresourceissueswith

afocusonfederalregulatoryactivity.Heisanexpertintechniquesofassigning

valuetoenvironmentalandnaturalresourcesthatdonothavemarketprices,whichisfundamentaltocost-benefitanalysisandtheassessmentofdamagestonaturalresources.Kopp’scurrentresearchinterestsfocusonthedesignofdomesticandinternationalpolicestocombatclimatechange.

WilliamPizerisVicePresidentforResearchandPolicyEngagementatRFF.From

2008to2011,hewasDeputyAssistantSecretaryforEnvironmentandEnergyatthe

USDepartmentoftheTreasury,whereheoversawTreasury’sroleintheUnitedStates’globalenvironmentandenergyagenda.HeisaresearchprofessorattheSanford

SchoolofPublicPolicyatDukeUniversity,wherehewaspreviouslytheSusanB.KingProfessorandSeniorAssociateDeanforFacultyandResearch.Priortohistimeat

theUSTreasuryandDukeUniversity,hewasaresearcheratRFFformorethana

decade.Pizerhaswrittenmorethan60peer-reviewedpublications,books,andarticles,focusedontheeconomicsofclimatechange,andholdsaPhDandMAineconomics

fromHarvardUniversityandaBSinphysicsfromtheUniversityofNorthCarolinaatChapelHill.HeiscurrentlyamemberoftheNASEMCommitteeonAcceleratingDecarbonizationintheUnitedStatesandisaresearchassociateattheNational

BureauofEconomicResearch.

KevinRennertisafellowatRFF,wherehefirstjoinedasavisitingfellowin2017.

PriortohisarrivalatRFF,Rennertservedasdeputyassociateadministratorfor

theOfficeofPolicyattheUSEnvironmentalProtectionAgency.Leadingupto

hisappointmentintheOfficeofPolicy,heworkedassenioradvisoronEnergy

fortheSenateFinanceCommittee.Inthatrole,Rennertadvisedthecommittee’s

Chairman,SenatorRonWyden(D-OR),onawiderangeoftopicsrelatedtoclean

energy,efficiency,andpoliciestoreducegreenhousegasemissions.From2008to2014,heworkedonenergyandclimatelegislationasseniorprofessionalstafffor

theSenateEnergyCommittee.Inthatcapacity,Rennertledthedevelopmentof

theCleanEnergyStandardActof2012(S.2146),apresidentialprioritythatwouldusemarketmechanismstodoubletheamountofelectricitygeneratedintheUS

fromloworzerocarbonsourcesby2035.In2010and2011,Rennertalsotaught

graduatecoursesinenergypolicyasadjunctfacultyintheDepartmentofStrategicManagementandPublicPolicyatGeorgeWashingtonUniversity.

ResourcesfortheFuturei

AboutRFF

ResourcesfortheFuture(RFF)isanindependent,nonprofitresearchinstitutionin

Washington,DC.Itsmissionistoimproveenvironmental,energy,andnaturalresourcedecisionsthroughimpartialeconomicresearchandpolicyengagement.RFFis

committedtobeingthemostwidelytrustedsourceofresearchinsightsandpolicysolutionsleadingtoahealthyenvironmentandathrivingeconomy.

TheviewsexpressedherearethoseoftheindividualauthorsandmaydifferfromthoseofotherRFFexperts,itsofficers,oritsdirectors.

SharingOurWork

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CarbonBorderAdjustments:DesignElements,Options,andPolicyDecisionsii

Abstract

Carbonborderadjustments(CBAs)arefeesimposedontheimportsofcommodities

andproductsbasedonthequantityofgreenhousegases(GHGs)emittedduringtheirproduction.ThepurposeofaCBAistoallowtheproducersofsuchcommoditiesin

countrieswithhighlyambitiousclimategoalstoremaincompetitiveintheirdomesticmarketsagainstimportsfromlessregulatedjurisdictions.CBAsarenotpartofthe

currentclimateandinternationaltradepolicymix,butthatwillchangeinOctoberwhentheEuropeanUnion’sCarbonBorderAdjustmentMechanism(CBAM)goesintoeffect.Moreover,multiplebillsintheUSSenateproposeCBAs.ThepurposeofthisreportistoidentifysomeoftheimportantCBAdesignelementsanddiscussoptionsavailabletopolicymakers,particularlyintheEuropeanUnionandtheUnitedStates.

ResourcesfortheFutureiii

Contents

1.TheNewTradeandClimateLandscape1

2.CarbonBorderAdjustmentsasaPolicyTool2

3.DesignElements2

3.1.CoveredProducts3

3.2.Fees3

3.3.ApplicationofFees4

3.4.DefinitionofGHGIntensity5

3.5.Baselines6

3.6.InformationResourcesandMethodsUsedtoMeasureGHGIntensity6

3.7.DomesticEmissionsReductionStrategiesandCBAs8

3.8.Clubs,Alliances,andExemptions9

4.ObservationsandQuestions10

5.References11

CarbonBorderAdjustments:DesignElements,Options,andPolicyDecisionsiv

1.TheNewTradeandClimateLandscape

Asconcernoverclimatechangegrows,anddevelopedeconomiessetincreasingly

ambitiousclimategoals,emissionsfromthehard-to-abateindustrialsectorsoccupyanevergreaterportionofthepolicydiscussion1Theindustrialsectorstendtoproduce

primarycommoditiesthataresoldincompetitiveinternationalmarkets,wherecost

isamajordeterminantindefiningmarketshare.Theneedtomaintaintheproducers’

internationalcompetitivenesswhileimplementingcostlydecarbonizationpolicieshaslednationstobegintoaligninternationaltradeandclimatepolicies.ThemostsalientexampleistheEuropeanUnion’sCarbonBorderAdjustmentMechanism(CBAM).2

Coincidentwiththeclimateconcernsoverindustrialemissionsarethegraveglobalsupplychainissuesaffectinginternationallytradedcommoditiesandproducts.Thechallenges

oftheCOVIDpandemic,thecurrentgeopoliticaltensionsbetweeneastandwest,and

sanctionsimposedinresponsetothewarinUkrainehaveraisedtherisktointernationaltradesupplychainsandfocusedattentiononimprovingsupplychainresilienceand

security.

Climate-alignedinternationaltradepoliciesofhigh-ambitioncountriestendtofocus

onimportsfromnationswithhigh-carboncommodityproducersthatarenotsubjectto

similarlyambitiouspoliciestoreduceemissionsovertime.Beyondclimate,themoveto

reorienttheoriginofsupplychainsandstrengthentraderelationshipswithpolitically

like-mindednationscandividetradingpartnersintolow-andhigh-ambitioncountries,

eventhoughclimatepolicyisnotdrivingthecountrycategorization.Therefore,itisnot

surprisingtoseediscussionofinternationaltradepoliciesthatseektoaddressconcernsaboutclimateaswellassupplychainsandgeopolitics.Climate-alignedtradeandderiskingsupplychainscanhavethepotentialtonegativelyaffectdevelopingcountries.

TheEUCBAMimposesfeesonimportsofcommoditiesbasedontheembodiedcarbon.However,theEUdoesnotconsidertheCBAMatradepolicy,butratheranextension

ofitsemissionsallowanceclimateprogram.Regardless,theCBAMcanbeexpectedto

reduceEUimportsofhigh-carbon-contentcommoditiesfromlow-ambitioncountiesbyraisingthecostofthosecommoditieswithintheEU.Fromtheexporters’perspective,

theCBAMlooksnodifferentfromatariffplacedontheirexportsproportionaltothe

carboncontent.Ifimportsfromlow-ambition,high-carboncountriesalsoaddtosupplychainorgeopoliticalrisk,theCBAMservestoreducethisriskandleveltheclimatepolicycompetitiveplayingfield.However,thishasnotbeenpartoftheEUdiscussion.

1Hard-to-abatesectorsincludeironandsteel,aluminum,cement,pulpandpaper,andavarietyofindustrialchemicals.

2October2023willseetheintroductionoftheEuropeanUnionCarbonBorderAdjustment

Mechanism(CBAM).ThelawrequiresimportersofspecificproductstopurchaseEU

EmissionsTradingSystemallowancesequaltotheamountofcarbonembeddedinthe

productstheywishtoimportintotheEuropeanUnion.Ifanimportercandemonstratethatthemanufacturingsectorofthecountryoforiginhasacarbonpricethat’sequaltothepriceofanEUallowance,thenthecostoftheallowancepurchasewillberebatedtotheimporter.

CarbonBorderAdjustments:DesignElements,Options,andPolicyDecisions1

2.CarbonBorderAdjustmentsasaPolicyTool

Theremainderofthisreportfocusesoneightdesignelementsofcarbonborder

adjustment(CBA)tradepolicies,theoptionsavailabletopolicymakers,andsome

implicationsofthechoicesmade.3Inmostcases,wediscussthedecisionswithrespecttotheseoptionsintheEUCBAMandtwoUSlegislativeproposalsintroducedinthe

Senate:theFair,Affordable,Innovative,andResilientTransitionandCompetitionAct(FAIRAct),sponsoredbySenatorChrisCoons(D-DE),andtheCleanCompetitionAct(CCA),bySenatorSheldonWhitehouse(D-RI).

3.DesignElements

Theeightdesignelementsareasfollows:

1.importedproductsthataresubjecttofees(oftentermedcoveredproducts)42.magnitudeofthefees

3.howfeesareappliedtothecoveredproducts

4.definitionofembodiedcarbon—thatis,carbonintensityorgreenhousegas

(GHG)intensity5

5.baselineagainstwhichtheGHGintensityofcoveredproductsismeasured

6.informationresourcesandmethodsusedtomeasureGHGintensity,includingdefaultvalueswhendetaileddataareunavailable

7.domesticemissionsreductionstrategiesforcoveredproductsthatinteractwiththeCBAs

8.clubs,alliances,andexemptions.

3Carbonborderadjustmentsareonepolicytooltomaintaintheinternational

competitivenessofcommoditiesandproductsproducedincountrieswithambitious

decarbonizationgoalsandpolicies.Otherpoliciesincludethefreeallocationof

emissionsallowancesincountriesthathaveemissionstradingsystems(usedbytheEU)anddomesticcontentrequirementsinothercountries.Forthepurposesofthisreport,wefocusonCBAs.WeuseCBAMtorefertotheEUlawandCBAtorefertothegeneralclassofborderpolicies.

4Forthepurposesofthisreport,commoditiesreferstoironandsteel,aluminum,cement,

severalindustrialchemicals,petrochemicals,andsomerefinedminerals.Productsreferstomanufacturedgoodsthatusecommoditiesasprimaryinputsintotheproduction

process.

5Whilewefollowcurrentterminologyandrefertothesepoliciesascarbonborder

adjustments,theyaremoreproperlythoughtofasGHGborderadjustments,sinceanyparticularpolicymaybebroaderthananarrowfocusoncarbon.

ResourcesfortheFuture2

3.1.CoveredProducts

TheprimarypurposeofaCBAistoensurethecompetitivenessofdomesticproducersastheyundertakepotentiallycostlyactionstocomplywithdomesticGHGregulatorypolicies,includingbymakingsignificantinvestmentsinnewtechnologiesandrefiningproductionprocessestoreducetheGHGintensityoftheirproducts.Theproducts

tobecoveredbyaCBAwouldthenbedrawnfromalistofproducts(a)exchangedinhighlycompetitiveinternationalmarkets,(b)wheredomesticproducersface

significantemissionsreductioncosts,and(c)wherecompetingimportscontain

significantamountsofembodiedGHGsbeyondcomparabledomesticproducts.

Forthemostpart,oneexpectstoseethelistofcoveredproductsdominatedby

primarycommoditieswithrelativelyhighGHGintensities.TheEUCBAMfocuseson

cement,ironandsteel,aluminum,fertilizers,electricity,andhydrogen;theFAIRActonsteel,aluminum,cement,andiron;andtheCCAonasimilarsetofprimarycommoditiesbroadenedtoincludefossilfuels,relatedpetroleumproducts,andaselectionof

industrialchemicals.6

AsaCBAraisesthepriceofcoveredprimaryproducts,itincreasesthecostof

thoseproductstodomesticmanufacturersthatusethemtoproducedownstreammanufacturedproducts,therebyincreasingthecostofthosedomesticallyproduceditems.Asthosecostsrise,oneexpectstoseeanincreaseintheimportsof

manufacturedproductscontaininghigh-carbonprimarycommoditiesfromother

nations,inpartdefeatingthepurposeoftheCBA.AllthreeCBAshaveprovisions

fortheexpansionofthecoveredproductslisttoincludedownstreammanufacturedproductsthatcontainlargeproportionsofprimaryproducts.Thewayfeesareappliedtodownstreamproductsissignificantlymorecomplexthantheapplicationoffeesforprimarycommodities(seeSection3.3).

3.2.Fees

Theimpositionoffeesisthemechanismbywhichthepriceofcompetingimports

isincreasedinthedomesticmarket,anditisusedtoensurealevelplayingfieldfor

domesticproducersfacinghighemissionsreductioncosts.Thepolicymakerhas

severaloptionswithrespecttosettingthelevelofthefeeaswellasitsapplication

(Section3.3).TheEUCBAMsetsthefeeleviedintonsofCO2e(thecarbonequivalentofallGHGs)pertonofcoveredproductattheaverageannualpriceofanEUemissiontradingsystemallowance.TheCCAsetsthefeeattheprevailingsocialcostofcarbon.Inbothcases,thefeechargedtotheimporterofcoveredproductsisthesamefee

domesticproducerspaytomaintaincompliancewithrelevantdomesticregulatoryprograms.TheFAIRActsetsthefeeattheaveragecostofcomplyingwithdomesticregulationsdesignedtolimitGHGemissionsforeachsectorproducingacovered

product(seeSection3.3).

6AfulllistofCleanCompetitionActcoveredproductsisfoundin§4694(1)(4)(A)ofthe

billtextat

/bill/117th-congress/senate-bill/4355/text

.

CarbonBorderAdjustments:DesignElements,Options,andPolicyDecisions3

Otherfeestructuresareavailabletopolicymakersdependingonthegoalstheywish

toachievewiththeCBA.Forexample,ratherthanstrictlyfocusoncompetitiveness,

policymakersmaywishtosignificantlyreducetheGHGsembodiedinthegoodstheyimportoversomespecifiedtimeinterval,say10years.Theclimaterationalecouldbe

todenyUSmarketstoexportersofhighlyGHG-intensiveproducts.Thesefeescouldalsoreflectsupplychainsecurityorgeopoliticalconcerns.Insuchcases,thefeescouldbesettoratchetupovertimetoincreasinglydiscouragetheimportationofproducts

withGHGintensitiesabovethoseofdomesticproducers.Suchagoalcouldsuggestascheduleinwhichthefeesdifferbyindividualcoveredproducts.Additionalcomplexitytoachievethisgoalcouldbeappliedwhereeachimportedcoveredproductisassignedtooneofasmallnumberofgroups,dependingupontheGHGintensityofthatproduct.Forexample,steelfromthreedifferentnationswithdifferentGHGintensitiescouldbeassignedtothreedifferentgroups.Anadvaloremfee,apercentageofthevalueofthecoveredproduct,ratherthanafeepertonofCO2ecouldthenbeleviedontheproductsofeachgroup,withlargerfeesappliedtogroupswithgreaterGHGintensities.

TheEUCBAM,FAIRAct,andCCAalllinkthefeeschargedonimportstothecostsdomesticproducersfaceincomplyingwithdomesticregulations.

3.3.ApplicationofFees

Beyondthelevelofthefee,thepolicymakerhasseveraloptionswithrespectto

theapplicationoffeestocoveredproducts.Theseoptionsmustalignwiththefee

structuresdiscussedinSection3.2.Thesimplestapproachisafeestructureunder

whichasinglefeepertonCO2eisappliedequallytoallcoveredproducts.ThisistheoptionfoundintheEUCBAM,FAIRAct,andCCA.ApplicationofthefeerequirestheassessmentoftheGHGintensityofthecoveredproduct,definedasthetonsofCO2epertonofcommodity.ThetotalimportchargepaidbytheimporteristhefeetimestheGHGintensitytimesthetonsofproduct.

TheapplicationoffeesintheCCAandFAIRActaddsanotherlayerofcomplexity.

TheCCAcomparestheGHGintensitiesoftheimportedcoveredproductandthe

sameproductproducedintheUnitedStates(termedthebenchmarkorbaseline,as

discussedinSection3.5).7Inthiscase,theimporterpaysfeesonlyonthetonsofGHGsabovethebenchmark.IftheimportedcoveredproducthasaGHGintensitybelowtheUSbenchmark,theimporterpaysnofees.

TheFAIRActtakesadifferentapproachandcomparesthestringencyofpoliciesto

reduceGHGemissionsintheexportingcountryandtheUnitedStates.Iftheexportingcountry’spoliciesarelessstringent,itscoveredproductswillbechargedafeeoneachtonofembodiedGHGswhenimportedtotheUnitedStates.Countrieswithpolicies

morestringentthanthoseoftheUnitedStateswillfacenofees.

7ThebenchmarkGHGintensityintheCCAistheaverageGHGintensityofacoveredproductproducedbyallproductionfacilitieswithintheUnitedStates.

ResourcesfortheFuture4

IncaseswherethepolicygoalistosignificantlyreducetheimportationofembodiedGHGs,theapplicationstructureofthefeescouldbemorecomplex.Onemodelwoulduseanadvaloremfee(seeSection3.2)foreachcoveredproductsetatsomeinitial

percentage.TheGHGintensityofeachcoveredproductwouldbereviewedatspecificintervalsandcomparedwiththedesiredratesofGHGintensitydecline.Thisperiodicreviewwouldallowforincreasesordecreasesintheadvaloremratestoalignwith

desireddeclinesinGHGintensity.

3.4.DefinitionofGHGIntensity

DefiningtheGHGintensityofacoveredproductisafoundationalelementofaCBA.ManyGHGaccountingprotocolsexist,someestablishedbyformalregulationsandtreatiesandothersassociatedwithunofficialentities.However,GHGaccountinginthecontextofaCBAhasitsownrequirements.OneofthebestdiscussionsofGHGaccountinginthecontextofaCBAisHinman(2023).

SinceCBAsareappliedtotradedproductsandnottofirmsorfacilities,theGHG

accountingmethodsthatunderpinthedefinitionofGHGintensitymustalignwiththeHarmonizedSystemthatisthebasisforcustomstariffsinover200countries(WCOn.d.).ThisisaCBAdesignelementforwhichtherearenootheroptions.

Optionsareavailable,however,fortheboundariesusedtodefinetherelevant

emissionsofGHGs.Hinman(2023)suggeststhattheoften-discussedlifecycle

carbonaccountingmethods(EPA2016)areinconsistentwiththeadministrationofaCBAbycustomsagenciesaswellastheHarmonizedSystem.Hinmanrecommendsthatemissionsboundariesbesetusingpoint-of-productionmethods,referredtoasgatetogateorcradletogate.Gate-to-gateanalysisconfinestheaccountingofGHGemissionstoaspecificportionoftheproductioncycle,whilecradle-to-gateanalysisexpandstheboundariestoincludetheemissionsfromtheextractionofrawmaterialsusedintheproductionprocess.

ThedraftregulationguidingtheinitialimplementationoftheEUCBAMsetsthe

boundaryconditionsforthedefinitionofGHGintensitytoalignwithgate-to-gate

analyses.8TheregulationstatesthattheGHGemissionssubjecttotheCBAMapplytodirectemissionsofGHGsfromtheproductionofcoveredproductsplusindirect

emissionsrisingfromthegenerationofelectricityusedtoproducetheproducts.

TheseboundariesareoftenreferredtoasScope1andScope2emissions.TheEUhasnotchosentoincludeanyemissionsassociatedwiththeextractionofrawmaterialsusedintheproductionofthecoveredproductsorwiththeproductionofintermediateproductsusedincoveredproductproduction(oftenreferredtoasupstreamScope3).

TheCCEhasthesameboundaryconditionsastheEUCBAM.TheboundaryconditionsspecifiedintheFAIRActarelikethoseoftheEUCBAMandCCAandinclude

“productionemissions”(directemissions).However,theFAIRActdiffersbyexcluding

8Thetextoftheregulationcanbefoundat

https://eur-lex.europa.eu/legal-content/EN/

TXT/PDF/?uri=CELEX:32023R0956

.

CarbonBorderAdjustments:DesignElements,Options,andPolicyDecisions5

theemissionsfrompurchasedelectricityandincludingupstreamemissionsfromtheextraction,processing,transportation,financing,orotherpreparationofafossilfuelforuseintheproductionprocess(e.g.,afossilfuelotherwiseassociatedwithdirectemissions).

Thechoiceofemissionsboundarieswillreflecttheimportanceofintermediate

goodsusedintheproductionofthecoveredproduct.Theupstreamemissionsfor

coveredprimarycommoditiesusingverysmallamountsofintermediateinputscanbenegligible,whileupstreamemissionsassociatedwithmorecomplexmanufacturedproductscanbequitesignificant.Todecreaseglobalanddomesticemissions,CBAsthatincludemanufacturedproductswithlargevolumesofprimarycommoditiesasintermediateinputsshouldaddtheGHGsembodiedintheintermediateproductstotheboundaryconditionsdefiningtheGHGintensityofthesemanufacturedproducts.

3.5.Baselines

IntheCBAcontext,abaselineisaproduct-levelGHGintensityagainstwhichthe

actualGHGintensityofanimportedproductiscomparedforthepurposesof

assessingborderfees.CBAfeesmaybeappliedwithoutabaseline.Forexample,theFAIRActandtheEUCBAMdonotcomparetheGHGintensityofcoveredproductswithabaseline;rather,importersoftheseproductspayafeepertononallCO2e

emittedduringtheproductionofthecoveredcommodityinthecountryoforigin,

wherethemeasurementofthoseemittedgasesisdefinedbytheboundaryconditionsinSection3.4.

Whenused,baselinescandefineanexemptlevelofemissionsbeforeCBAcharges

accrueorcandefinecategoriesforCBAcharges.TheclearestexampleiscontainedintheCCA,wherethebaselineisdefinedasthemeanGHGgasintensityofacoveredcommodityproducedwithintheUnitedStates.AnentitywishingtoimportacoveredproductintotheUnitedStateswouldpayafeeoneverytonofGHGsemittedduringtheproductionoftheimportedproductabovethebenchmark.Iftheimported

products’GHGintensityisbelowtheUSbenchmark,nofeeswouldbedue.For

example,consideracoveredproductwithaGHGintensityof2.0tonsofCO2epertonofcoveredproductandthecorrespondingUSmeanintensityof0.5.Importationof

1,000tonsoftheproductwouldbechargedthefeetimes(2tonsCO2e/tonproduct–0.5tonsCO2e/tonproduct)×1,000tonsproduct,or1,500tonsofGHGs.

3.6.InformationResourcesandMethodsUsedtoMeasureGHGIntensity

SettingemissionsboundaryconditionsforthedefinitionofembodiedGHGs,andthebaselineifoneisused,isanimportantfirststepinCBAdesign.Thenextstepinvolvesdecisionsregardingtheinformationusedtomeasuretheembodiedemissionsaswellastoestablishthebaseline.Whilemanydevelopednationsandtradingpartnersof

theUnitedStateshavewell-establishedenvironmentalreportingstandardsfortheir

ResourcesfortheFuture6

domesticindustries,manyofthosestandardsandprotocolsarenotalignedwiththerequirementsoftheCBA.Forexample,theUSEnvironmentalProtectionAgency’s

GreenhouseGasReportingSystemcollectsdetaileddataonGHGemissionsfromthecountry’smanufacturingfa