G7 Leadership on Interoperable CBAMs: The US-EU TTC Negotiating Model

Abstract

G7 states and others are considering or implementing carbon border adjustment mechanisms (CBAMs), but the lack of interoperable or harmonized emissions monitoring, reporting, and verification (MRV) rules around which these countries can coordinate their national policies creates risks for trade and investment. Implementing CBAMs without first addressing interoperability could generate trade barriers that impede economic and climate goals. The G7 countries have an opportunity to lead by addressing this issue. The US-EU Trade and Technology Council has proven a successful negotiating model that the G7 countries should consider adopting by focusing on incremental progress towards MRV interoperability and harmonization. Given distinct national perspectives, negotiations should focus on the G7 members and the products where national policies overlap.