Carbon Border Tax Reduces Global Emissions, Leakage, Says OECD

The European Union’s carbon border tax can contribute to reducing global emissions and prevent carbon leakage shifts in production and emissions to countries with less stringent policies, a new OECD report said.

Carbon leakage could even be eliminated if the EU implements the Carbon Border Adjustment Mechanism along with other policy changes, according to the report released Wednesday.

The Carbon Border Adjustment Mechanism, or CBAM, is a carbon price on imported industrial goods with high greenhouse gas emissions.

CBAM will require EU importers of emission-intensive goods—iron, steel, cement, fertilizers, aluminum, electricity, and hydrogen—to pay an adjustment on emissions embedded ...