Carbon tariff

A carbon tariff or border carbon adjustment (BCA) is an eco-tariff on embedded carbon. The aim is generally to prevent carbon leakage from states without a carbon price. Examples of imports which are high-carbon and so may be subject to a carbon tariff are electricity generated by coal-fired power stations, iron and steel from blast furnaces, and fertilizer from the Haber process.

Currently, only California applies a BCA—for electricity—while the European Union and the United Kingdom will apply BCAs from 2026 and 2027, respectively. Several other countries and territories with emissions pricing are considering them.

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