THE PROMISE AND PERILS OF CARBON TARIFFS.

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Date: Apr. 2022
From: Harvard Law Review(Vol. 135, Issue 6)
Publisher: Harvard Law Review Association
Document Type: Article
Length: 11,640 words
Lexile Measure: 1990L

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The defining image of the twenty-sixth Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) featured Simon Kofe, Tuvalu's foreign minister, delivering his address while standing knee-deep in the waters of the South Pacific. (1) His plea to the leaders gathered in Glasgow for the meeting was that urgent action be taken to limit carbon emissions and prevent the inundation of low-lying island states like Tuvalu. (2) His desperation was justified: national commitments to reduce greenhouse gas (GHG) emissions have proven inadequate, (3) and Glasgow was framed as the "last best hope" to slow the pace of climate change. (4) The alternative, and increasingly likely, outcome: an implacable march past the 1.5[degrees]C threshold that marks a point of no return for the earth's warming climate. (5) Despite Kofe's exhortations, however, multilateral efforts in Glasgow fell short. Though leaders pledged to reduce methane emissions, (6) limit the use of coal, (7) slow deforestation, (8) and support developing nations in adapting to climate change (9) (after breaking an earlier pledge to the same effect (10)), binding targets were few and far between.

One commitment stood out, however: in the lead-up to the summit, the United States and European Union announced a deal to work together to limit emissions in the steel and aluminum industries by levying tariffs against imports of those carbon-intensive goods. (11) The idea of carbon tariffs--trade measures that require importers to pay the same penalty as domestic producers for emitting carbon dioxide (12)--did not emerge for the first time in Glasgow. (13) A carbon border adjustment scheme formed the basis of recent draft EU regulations aimed at shoring up the common market's carbon-pricing system, (14) and similar proposals have appeared in draft legislative initiatives in Congress and are under consideration in Canada, (15) Russia, (16) and Japan. (17) As an alternative to multilateral treaty processes and a tool to reduce the political cost of climate action, carbon tariffs seem promising. Their global scope also makes carbon tariffs especially well suited to confront the challenge posed by growing emissions outside of the United States. (18)

Despite this potential and increased attention from policymakers, the legal status of carbon tariffs remains unclear. Conflicting views as to the compatibility of carbon tariffs with the commitments at the heart of the World Trade Organization (WTO) system--and a deadlocked dispute settlement process--mean that their status under trade law will likely remain ambiguous. Core principles of international environmental law, meanwhile, do not offer clear evidence of a legal obligation on states to address climate change, and the doctrine of state responsibility seems ill suited to the challenge of defining and enforcing the action incumbent on states. But governments do not seem to be in a mood to wait--carbon tariffs are coming.

This Chapter examines the emergence of what may prove to be an important and effective alternative to moribund treaty processes like COP26 against a muddled legal landscape. While carbon tariffs may reduce the social cost of responding to climate...

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Gale Document Number: GALE|A702381254