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WIFO - Österreichisches Institut für Wirtschaftsforschung

WIFO

Die Mission des WIFO ist es, eine Brücke zwischen akademischer Grundlagenforschung und wirtschaftspolitischer Anwendung zu schlagen, um zur Lösung sozioökonomischer Herausforderungen beizutragen und sachliche Grundlagen für Entscheidungen in Wirtschaft und Gesellschaft zu schaffen.

Lobbying Activity

Meeting with Evelyn Regner (Member of the European Parliament, Shadow rapporteur) and GLOBAL 2000, Friends of the Earth Austria

1 Dec 2025 · General Exchange of Views

Meeting with Jutta Urpilainen (Commissioner) and

12 May 2022 · Global Gateway

Response to Carbon Border Adjustment Mechanism

30 Mar 2020

A WTO-compatible Border Tax Adjustment for the ETS to Finance the EU Budget Abstract: One element of the proposed European Green Deal is a border carbon adjustment mechanism. The introduction of a BCA would allow the EU to phase out current carbon leakage provisions of the ETS and to auction off all emission allowances, thus rendering the ETS a more effective unilateral tool to price and reduce carbon emissions. In theory a BCA would be a perfect instrument to ensure a level playing field for domestic and foreign producers, thus avoiding potential carbon leakage. Until now, however, the legal and administrative issues of implementation have been deemed too huge to overcome. We derive a WTO-compatible (full) border tax adjustment (BTA) design that could be implemented in the near future, and we estimate potential EU BCA and BTA revenues using a dynamic new Keynesian (DYNK) model. The BTA design of our choice would generate substantial and stable revenues that could be used as innovative sustainability-oriented own resource to finance the EU budget. We find that estimated revenues would suffice to finance between 5% and 7% of the EU’s expenditure in the coming Multiannual Financial Framework period 2021-2027 and up to 16% in the year 2050. This new revenue source would allow Member States to reduce their current contributions to the EU budget accordingly and would thus create space to cut other more distortionary taxes at the national level, enabling an EU-wide supranational sustainability-enhancing tax shift. Thus, a BTA could contribute to tackle both environmental and fiscal challenges currently facing the EU. Authors: Alexander Krenek, Mark Sommer and Margit Schratzenstaller Official link to the paper: http://charly.wsr.ac.at/jart/prj3/wifo/resources/person_dokument/person_dokument.jart?publikationsid=65841&mime_type=application/pdf
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