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PRE-MEXICO REVIEW119

carbon emissions. However, competitiveness concernshave led to calls by some developed countries for bordertax adjustments (BTAs) -taxes on imports fromcountries that do not adopt stringent greenhouse gastargets. Such measures would severely damage theclimate negotiations and the good will shown byemerging economies and developing countries thatsigned up to the Copenhagen Accord. Moreover, OECDanalysis suggests that concerns about competitivenesslosses and carbon leakage might be exaggerated, andthat BTAs are not an effective way to address them. Analternative would be to smooth the transition to a low-carbon economy for sectors negatively affected byclimate policy by recycling revenues from carbon taxesor auctioned permits back to affected sectors, but inways that do not undermine incentives to cut emissions.Pricing carbon is not only about taxes or permits. It isalso about removing harmful subsidies that make thesefuels artificially cheap. Using data collected by the IEA,the OECD has calculated that removing fossil fuel120PRE-MEXICO REVIEWsubsidies in emerging economies could reduce globalGHG emissions 10 per cent below where they wouldotherwise be in 2050. And the economies in questionwould be better off. In Pittsburgh last year, G20 leaderspledged to phase out inefficient and wasteful fossil fuelsubsidies. As requested by the G-20, the OECD, IEA,OPEC and the World Bank have produced a reportwhich details the scale of these subsidies and the costsand benefits of eliminating them.We stand ready to support efforts towards an ambitiousagreement at COP16. The OECD, with our colleaguesat IEA, are working on carbon markets and climatefinance; effective and efficient policy mixes for bothadaptation to climate change and mitigation;"Measuring, Reporting and Verifying" actions andfinance; and integrating climate change intodevelopment co-operation activities. We are providingopportunities for governments to discuss and movetoward common approaches to deal with these keyissues. Examples include the OECD-IEA Climate