Catalysing the G20’s competitive advantage on global climate action, this policy brief proposes:
1. To swiftly act to fill the existing vacuum on coordination in the global governance architecture imperative to align the legal and policy regimes on climate and trade. Coordination is the G20’s remit and imperative for systemic global scale action, as demonstrated by the COVID-19 pandemic. We propose the establishment of a dialogue under the aegis of the G20, inclusive of the multilateral institutions, to seek globally accepted principles and rules to govern climate, energy transition and trade, starting with the issue of Carbon Border Adjustment Mechanisms (CBAM).
2. In this spirit, we also propose elements of an inclusive CBAM. We look at the EU, given the imminence of its CBAM, and offer an approach to its design and introduction based on a permit trading model and building on the EU Emissions Trading System (EU-ETS), ensuring that it is not contrary to the UNFCCC principles of equity and CBDR-RC.1