Homework 3

Carbon Border Adjustment (CBA)

• For Homework Assignment 3, please refer to the following references:
  • Carbon Border Adjustments: Design Elements, Options, and Policy Decisions
  • Carbon Border Adjustments: Design Elements, Options, and Policy Decisions (PDF)
  • Carbon Border Adjustment Mechanism: A new, green way of pricing carbon in imports to the EU

Question 1

• What is a Carbon Border Adjustment (CBA), and what is its main purpose?

Question 2

• Which sectors are typically impacted by CBAs, and why?

Question 3

• Describe the approach taken by the European Union’s Carbon Border Adjustment Mechanism (CBAM).

Question 4

• What role do “baselines” play in CBAs, and how do they function in the U.S. Clean Competition Act (CCA)?

Question 5

• How are fees typically structured in CBAs, and what are some variations across policies?

Question 6

• What challenges exist in measuring the GHG intensity of products for CBAs?

Question 7

• How do CBAs interact with domestic emissions reduction strategies?

Question 8

• What exemptions or alliances are considered in CBAs, and how do they impact international trade?

Question 9

• Why might CBAs raise concerns regarding compliance with World Trade Organization (WTO) rules?

Question 10

• What questions remain unanswered about the effectiveness and fairness of CBAs?