Carbon Tariffs May Galvanize Early Movers on Transition

(Bloomberg) -- As COP26 concluded with stronger ambitions on capping global warming but little progress on coordinating immediate global action, the risk is that early movers are held back by the fear of losing out to those with less stringent targets providing a cheap-energy advantage. Using a model of the global economy and scenarios published by the Network of Central Banks and Supervisors for Greening the Financial System, Bloomberg Economics estimates how much Group of Seven and European Union countries could lose through trade displacement in the first years of their transition if they choose to implement net-zero strategies immediately, while the rest of the world continues with current policies. BE also assesses how much would be at stake for their higher-emission trading partners if these early movers implemented carbon tariffs to prevent trade displacement.

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