Climate policy leadership in an interconnected world: what role for border carbon adjustments?

This report provides a broad and evidence-based analytical perspective of the debate around the possible role of a Border Carbon Adjustment (BCA) to deal with climate change. The new context of divergent climate ambition has led to a resurgence of interest in BCAs. The paper provides an overview of different policy instruments that can limit carbon leakage, with a particular focus on the BCA option as well as of alternative instruments. The report also analyses the issue of fragmented climate policies in the broader perspective of the trade-climate nexus and discusses how other policy measures-especially those related to trade- can help support climate objective (for example, reducing the existing barriers to trade in environmental goods, and removing environmentally harmful and trade distortive subsidies.