We analyse the effects of border carbon adjustment (BCA) on Finnish foreign trade, value chains, and the domestic economy. We also evaluate the practical issues and questions pertaining to international law, as well as alternative additional mechanisms to prevent carbon leakage.
Furthermore, the research contributes to knowledge on the more general effects of BCA on trade between the European Union and the rest of the world. The research helps in evaluating how evenly the price of carbon dioxide affects goods produced in the EU and third countries, and how countries’ production and value chains differ in this respect.
The results can support public debate and decision making in Finland, and they can be used to influence proactively the BCA-related political and other processes at the EU level. The research can help to minimise the possible adverse effects of BCA, especially those that would have an asymmetrical impact on Finnish export industries in particular or the economy as a whole.
This is a joint project between Etla (acting as project coordinator), the Finnish Environment Institute (SYKE), the University of Helsinki, and the Massachusetts Institute of Technology (MIT). The team consists of Martin Björklund (University of Helsinki), Ville Kaitila (Etla), Kai Kokko (University of Helsinki), Tero Kuusi (Etla, project coordinator), Markku Lehmus (Etla), Michael Mehling (MIT), Johanna Pohjola (SYKE), Sampo Soimakallio (SYKE), and Maria Wang (Etla).
