Stronger climate action through NDCs will require a major overhaul of domestic policies and measures, which can have significant trade effects. Moreover, in implementing their respective NDCs, countries can take various direct trade measures, such as removing or reducing tariffs on environmental goods and services; implementing carbon pricing; developing technical standards for low-carbon products; transferring low-carbon technologies; etc. With more ambitious NDCs expected in the future, trade-related climate measures are likely to assume increasing importance.
This report explores how the international trading system could help contribute to achieving the climate goals by systematically assessing 22 policy options, drawing on our earlier work as part of the project ‘Making the International Trade System Work for Climate Change, as well as an additional literature review and interviews with 26 experts. The options belong to three broad categories (see Figure 1):
- Options that focus on increasing the trade system’s supportiveness of climate action ‘in general’;
- Options specifically focusing on implementation of border carbon adjustments (BCAs); and
- Options dealing specifically with the phase-out and reform of fossil fuel subsidies.
For each of these options the report suggests ways in which they could be implemented. These findings aim to inform policy decisions on trade and climate, and to show a broad set of available measures and initiatives without being prescriptive on how a concrete set might look like. Instead, the report discusses the political feasibility of implementing the options in the short term (defined as less than five years), as well as in the medium (i.e. five to ten years) and long term (i.e. more than ten years).
This report offers an indication of options that are worth exploring in the near future to support the objectives and implementation of the Paris Agreement through trade rules and procedures.
A complementary policy brief will be available to download shortly.Author: K.Das, H.van Asselt, S. Droege, M. Mehling
Type: Final paper