EU carbon border adjustment - opportunity for climate protection and competition

In order to achieve the climate targets, a carbon price is necessary which reflects the true costs of emissions. Concerns have been raised that companies from Germany and Europe could shift production to regions where environmental protection standards and costs are lower. A border adjustment mechanim, which imposes a carbon price on imported goods, could remove this hurdle and contribute to an effective pricing of emissions. This policy brief shows how such a mechamism can be implemented in practice and which issues play a key role.