ABSTRACT
Climate change is fast becoming the most discussed environmental issue in world, as the threat it poses to mankind is evident. The rising sea level, ozone layer depletion and severe weather conditions are as a result of carbon emissions that contribute to climate change. Jason Bordoff in his article “Evaluating the Legality and Effectiveness of proposals to address competitiveness and leakage concerns” raised some policy concerns affecting the unilateral decision of a country to reduce carbon emission through tax. This memo will constructively discuss the author’s argument, laying out evidence while arguing for international consensus as the only way to achieve progress on carbon emission cuts.

Bordoff argued that the absence of an international agreement on the imposition of carbon tax to curb emissions would result in competitiveness and leakages leaving one side heavily disadvantaged by this unilateral action. This is a valid argument, as any action by a single country to impose tax on carbon intensive products so as to reduce emission, will do little to limit it but will instead increase it. The application of tax on carbon intensives goods tends to have severe economic and consumption effects on any economy. For example the imposition of carbon tax by the United States will result to an increase in the price of the product and the scaling back of production by firms. The firm will find it hard to operate in such country given the competition it faces from firms located in a country without carbon tax and tend to have market advantage with price. Facing this threat, the domestic US firm will relocate to a country with no carbon tax to enable it stay in business and maximize profit. This results to carbon emission leakages as firms will relocate to countries without carbon tax.
The legality of such border adjustment should it be imposed, will raise