Law and Governance of Carbon Border Adjustments

Measured against the legally binding international climate targets, climate policy must be massively accelerated on a worldwide scale. In the absence of effective global policy instruments, a central role can be played by combinations of regional quantity governance systems, such as the EU Emissions Trading System, and additional border adjustments, such as the newly established EU Carbon Border Adjustments (CBAM). This is to avoid mere emissions shifting to other states, to encourage these states also to pursue ambitious climate protection, and to avoid competitive disadvantages for domestic industries. This paper analyzes the ecological effectiveness of the CBAM—measured against the Paris climate targets—and its compatibility with world trade law. It combines a qualitative governance analysis with methods of legal interpretation. It is demonstrated that the CBAM does not raise any concerns under WTO law and can be classified as an ecologically effective measure supporting ambitious climate protection. However, the faster and more consistent introduction of the CBAM would be ecologically more effective.