15.10.2025
12:30-13:30
Designing Effective Carbon Border Adjustment with Minimal Information Requirements: Theory and Evidence
WIFO Research Seminar
Organised by: Austrian Insitute of Economic Research
Language: English
WIFO, Helene-Lieser-Saal or online via MS-Teams
Carbon leakage undermines the effectiveness of unilateral carbon pricing. Taxes on import-embedded emissions, like the EUs CBAM, prevent leakage but their product coverage is limited due to strong information asymmetries.
Fadinger and his colleagues propose an alternative policy (LBAM) that sterilises carbon leakage without requiring information on foreign carbon intensities. In a quantitative trade model, LBAM tariffs significantly improve over the EUs CBAM in terms of global emissions and EU welfare. Importantly, LBAM avoids large welfare losses among EU trading partners that would result if CBAM were extended to all sectors. Combining LBAM tariffs with equivalent export subsidies reinforces these advantages.
Please be aware that this seminar will be recorded and published digitally.