How WTO-Consistent Tools can Ensure the Decarbonization of Emission-Intensive Industrial Sectors

Abstract

The European Union (EU) has been a frontrunner in curbing greenhouse gas emissions, having established in 2005 the Emission Trading System (ETS) and having adopted in July 2021 a proposal for a Carbon Border Adjustment Mechanism (CBAM). This essay explains how the design of the EU CBAM proposal complies with World Trade Organization (WTO) rules, in particular with the principle of non-discrimination. It then discusses how the EU can cooperate with other countries that share similar climate ambitions to decarbonize industrial sectors and achieve the aims of the Paris Agreement. The essay argues that autonomous measures and international cooperation initiatives can work as complementary tools to attain climate neutrality.