The Form and Substance of International Cooperation on Border Carbon Adjustments

Abstract

The European Union's (EU) proposed Carbon Border Adjustment Mechanism (CBAM) underscores that the introduction of climate-motivated trade measures is no longer just a matter of academic debate. With countries ramping up domestic climate action at different speeds and levels of ambition, the likelihood of other countries following the EU's lead and adopting a border carbon adjustment (BCA)1 of their own will only increase. International cooperation can help avoid a fragmented landscape of varying BCA designs, mitigate concerns about trade protectionism, and ensure that the further development of BCAs leads to stronger global action on climate change. Some countries have begun to show an interest in pursuing international cooperation involving joint trade measures through “climate clubs.” Yet such international cooperation also raises new questions concerning the legal form, the forum through which cooperation should be pursued, and the (normative) substance of any international agreement on BCAs. The answers to these questions matter not only for the development and implementation of BCAs, but may also affect the future trajectory of the international legal regime for climate change and trade.