Dr Pirlot CBM0031

Written evidence submitted by Dr Alice Pirlot, Research Fellow at the University of Oxford Centre for Business Taxation

It is my pleasure to submit for your consideration my views on carbon border adjustments. I have analysed these measures from a legal perspective for many years and published a book on the topic. As the compatibility of carbon border adjustments with the law of the World Trade Organisation has been studied at length, I will not analyse this question here. Instead, I would like to focus on another important legal question: the compatibility of carbon border adjustments with international climate change law. In this letter, I will briefly examine two main models of carbon border adjustment measures and their compatibility with the approach of the Paris Agreement. The Paris Agreement is based on the principle of common but differentiated responsibilities and respective capabilities and leaves each party to decide on how they will contribute to the global response to climate change. Parties are not bound to adopt any particular type of instrument as long as their action reflect their “highest possible ambition”.

The first model includes carbon border adjustments on imported and exported products from all countries. In this case, their main objective is usually to prevent carbon leakage. Though such an objective is perfectly legitimate from an economic point of view, it seems contrary to the bottom-up and differentiated approach of the Paris Agreement, explained above, to put a price on the emissions generated in foreign countries, including developing ones. The second model includes carbon border adjustments limited to imports from countries that do not comply with the Paris Agreement. In this case, carbon border adjustment measures will strengthen the Paris Agreement by targeting non-cooperative countries. This second model should be preferred if the UK is willing to respect the normative approach of the Paris Agreement.

Other models of carbon adjustment measures in addition to these two are possible. I have described them in more details in a recent paper published in the Journal of Environmental Law. If you have questions about the arguments developed here as well as in this paper, I would be glad to answer them.

Thank you very much for taking the time to consider this letter.

January 2022