Ambitious Climate Targets and Competitiveness

In contrast, climate policy cooperation – in terms of a multilaterally coordinated CO₂ pricing scheme with a common border adjustment – achieves the greatest global emission reductions and creates welfare gains by avoiding future climate costs.

A joint climate club of the EU with the USA, the United Kingdom, Canada and Japan reduces global emissions by 14.8 percent, which corresponds to an annual reduction in CO₂ emissions of 5.46 billion tonnes.

In addition to the reformed EU Emissions Trading System, the EU carbon border adjustment is a key component for balancing international differences in climate ambitions and in the pricing of CO₂ emissions and for achieving a climate-neutral EU by 2050. With this instrument, the EU aims to ensure the competitiveness of European producers despite stricter EU climate targets and rising CO₂ costs and to reduce the risk of carbon leakage, i.e., the relocation of emissions to countries with less stringent emissions regulations.