The intersections between climate mitigation and trade policy are intensifying. The EU’s Carbon Border Adjustment Mechanism (CBAM) is unlikely to be the last or only policy of its kind. Overall, we are observing an uncoordinated transition towards a climate-attuned trade system: one that actively contributes to climate commitments by bolstering the trade of low-carbon materials, protecting domestic industries as they decarbonise – and, oftentimes, inciting exporting countries to grow their own climate efforts. 

As more jurisdictions consider introducing their own Border Carbon Adjustments (BCAs), an emerging patchwork of bespoke approaches could exacerbate existing trade tensions and erect new barriers to international trade. More importantly, lack of coordination also threatens to sour diplomatic relations at a time when cooperation on climate matters is essential. 

Against this backdrop, the Making the Trade System Work for Climate 2.0 project investigated how international trade policy can be amended to better support global climate targets – with a focus on BCAs and the potential of plurilateral agreements to increase climate-trade policy efficacy. This project was made possible through the funding and support of the Global Challenges Foundation. 

This project culminated in the report Bridging the Divide: Assessing the Viability of International Cooperation on Border Carbon Adjustments, which provides a systematic evaluation of current initiatives for climate-trade international cooperation: the G7 Climate Club, the EU-US Global Arrangement on Sustainable Steel and Aluminium (GASSA), and the Inclusive Forum on Carbon Mitigation Approaches (IFCMA). In doing so, the report lays out the current landscape for international cooperation of BCAs. This work was launched at COP28 for an audience of climate-trade experts and stakeholders in the field. 

This project was a continuation from the Making the Trade System Work for Climate Change project (finalised in 2018), which released insightful and internationally-recognised work on BCAs a year before the EU announced their intentions to propose CBAM. To read more of our work on climate-trade policy, please explore the publications shared below: 

• Policy Brief: Making Trade Work for Climate, Options for Policymakers – Climate Strategies
• Policy Brief: How to Design Border Carbon Adjustments that Work for the Climate – Climate Strategies
• Policy Brief: Tackling Fossil Fuel Subsidies through Trade Agreements – Climate Strategies
• Working Paper: The Trade System and Climate Action: Ways Forward Under the Paris Agreement – Climate Strategies
• Report: Making the International Trade System Work for Climate Change: Assessing the Options – Climate Strategies
• Report: Designing Border Carbon Adjustments for Enhanced Climate Action – Climate Strategies
• Report: Tackling Fossil Fuel Subsidies through International Trade Agreements – Climate Strategies

This project was led and carried out by the following Climate Strategies members:

• Harro van Asselt (research lead) – Senior Research Fellow, Stockholm Environment Institute (SEI), and Professor of Climate Law and Policy, University of Eastern Finland (UEF) Law School.
• Kasturi Das – Professor of Economics and Sustainability, Institute of Management Technology, Ghaziabad, Delhi-NCR (IMTG), India.
• Susanne Droege – Senior Fellow, Global Issues Research Division at the German Institute for International and Security Affairs, Berlin, Germany.
• Michael Mehling – Deputy Director, MIT Center for Energy and Environmental Policy Research (MIT CEEPR), and Professor of Practice, University of Strathclyde Law School.

The research received funding from the Global Challenges Foundation.

Past Events:

Webinar: International Cooperation on Border Carbon Adjustments: Assessing the Options 

During this webinar, participants heard from our research team and leading experts in the field, as they discuss the initial findings from Climate Strategies’ latest report on international cooperation on Border Carbon Adjustments (BCAs). Experts will discuss the international state of play on climate-trade policy cooperation and assess the strengths, weaknesses, and future of international cooperation on BCAs.

Watch the recording here

COP28 Event: Climate Clubs and Border Carbon Adjustments: Strengthening International Cooperation at the Interface of Climate and Trade Policy  

At this event, leading researchers and experts in the field of climate-trade policy discussed the prospects and limitations of international cooperation related to BCAs. This event also launched our project’s final report Bridging the Divide: Assessing the Viability of International Cooperation on Border Carbon Adjustments.

Find out more 

Bridging the Divide: Assessing the Viability of International Cooperation on Border Carbon Adjustments

In this report, Climate Strategies members make a case for international cooperation in relation to Border Carbon Adjustments (BCAs) and assess the current state of play to enable this cooperation. This is the final output of our project ‘Making the Trade System Work for Climate 2.0’, which investigates how international trade policy can be amended to better support global climate targets – focusing on BCAs and the potential of plurilateral agreements to increase climate-trade policy efficacy.

Read the report