Consider two toys that look and work the same. One is made locally with environmentally friendly processes and materials and is priced at $3.69. The other is very carbon-intensive and is imported into our market with a price of $2.19. How can we encourage industries and consumers to choose products that take the environment into account? Enter border carbon adjustments. This animation explains how a domestic carbon pricing strategy in combination with taxing carbon-intensive products at borders can lead to a greener economy.

For more information on this trade-savvy approach to reducing carbon emissions, read CIGI Post-Doctoral Fellow Maria Panezi’s paper, “When CO2 Goes to Geneva: Taxing Carbon across Borders — Without Violating WTO Obligations,” and listen to her interview on the CIGI Podcast.