Policy paper published on how EU trade policy can enhance climate action

This paper discusses what role trade policy can play in EU climate policy. It does so by reviewing how low-carbon investment can be boosted while addressing carbon leakage risk. It is part of an ongoing series of the Mistra Carbon Exit policy briefs exploring how the Von der Leyen Commission can best approach the multiple challenges facing the EU.

To address the role of trade policy in an EU framework for low-carbon investment, the authors i) review the economic, legal, and administrative viability and implementation timeline of carbon adjustments at the border, ii) examine the possibility to augment the EU Emissions Trading System to include consumption of carbon intensive materials, and iii) explore the potential of product standards to achieve the same aim.

All these approaches have different advantages and shortcomings in terms of political acceptability, effectiveness and implications for the world trade system. To support partner countries in advancing climate action, both bilateral and multilateral measures should be examined.

To download the policy paper and read more, please click here.