By Randolph Bell, Director, Atlantic Council Global Energy Center; Richard Morningstar Chair for Global Energy Security and Elena Benaim, Intern, Atlantic Council Global Energy Centre
Carbon border adjustment (CBA) policies are gaining momentum on both sides of the Atlantic. They were proposed as a key element in the European Green Deal and as part of US Democratic presidential nominee Joe Biden’s climate plan. But how do they work? Carbon border adjustment mechanisms tax imported goods based on their carbon footprint with the aim of limiting emissions leakage and levelling the playing field for domestic industries that produce goods with lower greenhouse gas emission footprints than imports that may be cheaper but have higher greenhouse gas footprints.
There are a number of technical challenges to overcome in implementing a carbon border adjustment policy, including whether to peg it to a domestic price on carbon, which sectors to apply the tax, and how to ensure accurate and transparent data on embodied carbon. But one major concern is that the policy could have negative consequences for the economies of developing countries by cutting their export revenue and/or impeding the development of new export-oriented industries. Developing countries might argue that the policy runs counter to the Paris Agreement’s bottom-up, nationally determined contributions, and could push them to cut emissions more than what they pledged. Carbon border adjustment could also run afoul of the Common But Differentiated Responsibility (CBDR) principle that developing countries do not share the same responsibility as developed countries in addressing climate and environmental issues.
Riad Meddeb, Senior Principal Advisor for Small Island Developing States, UNDP
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.This blog is also a part of a thread looking more specifically at the impacts and responses to the COVID-19 crisis in Least Developed Countries (LDCs).
Small Island Developing States (SIDS) have experienced great success in expanding their tourism industries, particularly over the past 10 years. The industry is an economic lifeline and driver of development for many SIDS. Their rich biodiversity and beautiful ecosystems attracted around 44 million visitors in 2019. However, global travel restrictions imposed as a result of the COVID-19 pandemic have devastated SIDS’ economies. Compared to Gross Domestic Product (GDP), export revenues from tourism represent about 9% of SIDS economies. In countries like St. Lucia and Palau, tourism revenues make up 98 and 88 percent of total exports respectively. It is a vital source of revenue for community livelihoods, disaster recovery, biodiversity and cultural heritage preservation.
By Maria Netto, Lead Capital Markets and Financial Institutions Specialist, Inter-American Development Bank, and Naeeda Crishna Morgado, Policy Analyst – Green Growth and Investment, OECD
The developing world urgently needs more and better infrastructure. Affordable and accessible water supply systems, electricity grids, power plants and transport networks are critical to reducing poverty and ensuring economic growth. The way new infrastructure is built over the next 10 years will determine if we meet the Sustainable Development Goal (SDGs) and the Paris Agreement objectives. Considering the long lifespan of most infrastructure projects, the decisions developing countries make about how they build infrastructure are critical: we can either lock-in carbon intensive and polluting forms of infrastructure, or ‘leap frog’ towards more sustainable pathways.
By Milan Brahmbhatt, Senior Fellow, New Climate Economy (NCE) and World Resources Institute1
Explore this topic further with the upcoming launch of the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa.
Stay tuned for details
Policy makers across Africa have embraced industrialisation and economic transformation as keys to accelerate inclusive growth. They also increasingly see the need for economic transformation to deliver green growth – growth that does not endanger Africa’s natural environment in ways that reduce the welfare of present and future generations. Economic transformation and green growth depend on doing new things: making risky investments in new, unfamiliar sectors or products or adopting new, unfamiliar methods, processes, technologies, inputs or business models. All this depends crucially on the activity of entrepreneurs, who drive change through their innovation and risk-taking. Fostering entrepreneurship, including green entrepreneurship, is thus a key policy aim for African countries.
By Kate Eklin and Myriam Gregoire-Zawilski of the OECD Development Centre’s Emerging Markets Network (EMnet)
Last week, officials in Beijing declared an air pollution “red alert” for the first time since the monitoring system was implemented in 2013. Pollution levels put life in the city on hold: factories shuttered, schools closed, traffic was restricted, fireworks were banned.
By Carl Dahlman, Head of the Thematic Division and Head of Global Development Research at the OECD Development Centre and Martin Wermelinger, Economist at the OECD Development Centre Strong growth over much of the past decade has substantially boosted developing countries’ share of the global economy and accelerated per capita income convergence with richer countries. We call this process “shifting wealth.” However, productivity is still lagging … Continue reading How to continue the shifting wealth momentum