Five decades of research on border carbon adjustments – a systematic review of the literature

In a world of nationally determined climate action, ambitious climate policies in some regions that are not matched by similar efforts in trade partners entail the risk of carbon leakage. Carbon border adjustment mechanisms that impose carbon costs comparable to those of domestic producers are a way to level the playing field and alleviate leakage risks. Such mechanisms have been debated in the academic literature for about 50 years, but only very recently seen practical implementation in the European Union (EU), whose Carbon Border Adjustment Mechanism (CBAM) imposes a price comparable to that applied under the EU Emissions Trading System (EU ETS) on emissions embedded in imports of certain carbon-intensive basic materials, such as iron and steel. Previous papers have surveyed the literature on carbon border adjustments in a variety of disciplines, including economics, legal studies and political science, with the last comprehensive literature review conducted over a decade ago. We aim to extend and update these contributions by conducting a systematic review of the relevant literature. Based on a keyword search, we will establish a database of articles to be reviewed. These will be coded to track the evolution of topics addressed in such research and the interest of different scientific communities over time. These insights will then be used to single out major issues on which scholars agree or disagree, and to identify the underlying reasons for overlapping or conflicting views. Finally, the systematic review will also help identify remaining research gaps in light of the evolving political debate around BCAs.