In EPS 3.4, we added calculations of changes in imports and exports of non-energy products (with and without a carbon border adjustment mechanism; CBAM), documented in issue #183. We added associated cash flows for the changes in imports and exports.
However, we did not add a cash flow for the case where (1) there is a carbon tax enabled, (2) there is a CBAM enabled, and government pays a carbon tax rebate to industries that export their products.
Not every CBAM may include rebates for exported products. Without a rebate for exported products, the environmental performance of the carbon tax may be stronger, but it might put domestic producers at a disadvantage when trying to compete in foreign markets with weak or absent carbon pricing. Therefore, there should be a control setting to set whether or not government pays carbon tax rebates on exported products. This setting is only relevant when there is a carbon price in effect and the CBAM is enabled.
jrissman
commented
2 years ago
In EPS 3.4, we added calculations of changes in imports and exports of non-energy products (with and without a carbon border adjustment mechanism; CBAM), documented in issue #183. We added associated cash flows for the changes in imports and exports. However, we did not add a cash flow for the case where (1) there is a carbon tax enabled, (2) there is a CBAM enabled, and government pays a carbon tax rebate to industries that export their products.
Not every CBAM may include rebates for exported products. Without a rebate for exported products, the environmental performance of the carbon tax may be stronger, but it might put domestic producers at a disadvantage when trying to compete in foreign markets with weak or absent carbon pricing. Therefore, there should be a control setting to set whether or not government pays carbon tax rebates on exported products. This setting is only relevant when there is a carbon price in effect and the CBAM is enabled.