In the debate on the implications of climate change policies for global competitiveness and carbon leakage, policies such as energy-efficiency requirements, cap-and-trade schemes and carbon taxes have come to the forefront. Countries trying to mitigate climate change have raised concerns that their energy-intensive industries risk poor competition with firms in non-mitigating countries, which could result in market-share losses and consequently a relocation of emissions.
Options are available to address such concerns. The free distribution of allowances to emissions-intensive sectors of production is one, adopted by the European Union and included in other existing proposals. Another alternative is internationally negotiated sectoral agreements, which is part of the current negotiations of the UNFCCC. A third option is levelling the playing field with measures at the border to equalize carbon costs. Calls for this controversial option are being considered in national legislation in the United States.
On these subjects, ICTSD’s Global Platform on Climate Change, Trade and Sustainable Energy (the Global Platform) has undertaken research and analysis and has organized policy dialogues across policy communities and with the inclusion of stakeholders. The aim is to promote equitable and nondiscriminatory approaches to the potential use of trade instruments to address carbon leakage and competitiveness and to generate awareness of inherent potential welfare and sustainability costs.
Research and Analysis:
The Microcosm of Climate Change Negotiations, What Can the World Learn from the European Union?, by Håkan Nordström, ICTSD Programme on Global Economic Policy and Institutions, December 2009
Competitiveness and Climate Policies: Is There a Case for Restrictive Unilateral Trade Measures?, ICTSD Programme on Competitiveness and Sustainable Development, Information Note No. 16, December 2009
Climate Change Mitigation Policies in Selected OECD Countries: Trade and Development Implications for Developing Countries, by Diarmuid Torney and Mustapha Kamal Gueye, ICTSD Programme on Competitiveness and Sustainable Development, Issue Paper no. 8, December 2009
Embodied Carbon in Traded Goods, by Jiang Kejun, Aaron Cosbey, Deborah Murphy, Background Paper to the Trade and Climate Change Seminar, 18–20 June 2008 in Copenhagen, Denmark, August 2008
Trade, Climate Change and Global Competitiveness: Opportunities and Challenges for Sustainable Development in China and Beyond, ICTSD Programme on Trade and Environment, Selected Issue Briefs No. 3, March 2008.
Policy Dialogues
Climate Consortium Denmark Side Event on “Competitiveness Impacts and Carbon Leakage: Assessing the Evidence and the Policy Options”, co-organised with IISD, alongside the UNFCCC COP 15 negotiations, 17 December 2009, Bella Center Climate Consortium Denmark, Copenhagen, Denmark
Roundtable on “Competitiveness and Carbon Leakage: Border Measures and Beyond“, at the ICTSD Trade and Climate Change Day alongside the UNFCCC COP 15 negotiations, 15 December 2009, Copenhagen, Denmark
Climate Change, Competitiveness and Trade Policy: Opportunities and Challenges for the Future of the Multilateral Trading System, WTO Public Forum, 25 September 2008, Geneva
International Trade, Climate Change and Global Competitiveness, co-organised with UNEP and the World Bank, 4 October 2007, Geneva, Switzerland