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New BPC Report Analyzes Border Carbon Adjustment Policy Designs to Advance U.S. Trade and Climate Goals

Washington, DC — A new report from the Bipartisan Policy Center identifies and analyzes three major policy design approaches to establish a border carbon adjustment (BCA) policy, which would provide federal lawmakers a means to achieve several trade and climate goals through one well-designed system. 

“America needs a new trade regime that rewards U.S. industry for its superior emissions performance and at the same time, curtails China’s ability to leverage its poor environmental standards as a means to capture global market share,” said George David Banks, BPC fellow and former special assistant for International Energy and Environment at the National Economic and National Security councils in the Trump administration. 

BCA policies apply a carbon-related tariff on higher-emission imports, leveling the playing field for cleaner domestic manufacturers. 

The paper, Understanding Border Carbon Adjustments, explains how BCAs function and evaluates the three main approaches—Carbon Tax BCA, Regulatory Cost BCA, and Emissions Performance BCA—and their subsets against a common set of economic, climate, and geopolitical goals and challenges, finding an Emissions Performance BCA offers the most potential. 

“Most decarbonization policies are focused on reducing emission here in the U.S. and ignore the fact that the majority of emissions occur outside of our borders. The beauty of this policy option is that it would support jobs and manufacturing in the U.S. while encouraging decarbonization across the globe,” said Xan Fishman, BPC director of energy policy and carbon management. “Democrats and Republicans alike are interested in holding other countries accountable for the dirtier products they want to export while supporting our clean domestic producers. There’s a win here for both sides of the aisle, for our economy, for our geopolitics, and for reducing emissions.” 

A forthcoming report will go into more detail on specific design mechanics and recommendations for implementing an effective Emissions Performance BCA. 

Read the Report