Dealing with carbon leakage - rebates

US proposal to deal with competitiveness under a cap and trade programme

As part of the cap-and-trade program, the U.S. government would distribute rebates to manufacturing industries affected by foreign competition that doesn’t have to pay for emitting carbon. These rebates would be limited to U.S.-based manufacturing industries with globally traded products, including iron, steel, pulp, paper, cement, rubber, basic chemicals, glass, and aluminum, which meet specific eligibility criteria. In the event that an international agreement cannot be reached soon, the rebates are designed to compensate those industries that will incur additional compliance costs for direct and indirect carbon emissions under a U.S. cap-and-trade regime and face competition from overseas manufacturers located in countries without similar greenhouse gas-reduction requirements....

in the unlikely event that the rebate provisions are determined to be ineffective, then the proposed legislation authorizes the president to implement a so-called “border adjustment” program...

while the rebate provisions are not beyond WTO scrutiny, they are less likely than the border adjustments to raise trade or WTO issues as they do not involve potentially discriminatory treatment against imports.

via Climate Progress