Will the EU’s planned carbon border tax backfire?
Emerging economies such as Brazil, South Africa, India and China, have criticised the plan as “discriminatory” and unfair to developing nations.
Implementing a border levy to price carbon-intensive imports and protect European industries will be “extremely complicated,” warned Jonathan Pershing, a member of the US climate envoy’s team.
“I do note that it’s extremely complicated to think about the structure of a border tax,” Pershing told participants at a EURACTIV debate last Friday (7 May).
“I don’t disagree in principle that it has value, but I think that it’s got enormous complexity,” he warned.
The carbon border adjustment mechanism, due to be revealed in July, aims to put a price on imports from countries where it is cheaper to pollute, as a way of protecting European manufacturers facing higher carbon costs.
But it has ruffled feathers around the world. Emerging economies such as Brazil, South Africa, India and China, have criticised the plan as “discriminatory” and unfair to developing nations.
Across the Atlantic, US climate envoy John Kerry warned in March that the EU levy should be envisaged only as a last resort measure, saying: “It does have serious implications for economies, and for relationships, and trade.”
European Union plans to impose taxes on carbon at its border are “discriminatory” and unfair to developing nations, ministers from Brazil, South Africa, India and China have warned. EURACTIV’s media partner Climate Home News reports.
Comparing carbon pricing policies
One issue is how carbon pricing policies outside Europe can be compared with the EU’s in order to work out whether the levy should apply or not.
Unlike Europe, the US has no harmonised price on carbon because it chose not to implement an emissions trading scheme at federal level.
“We do have substantial and rigorous investments and regulatory programmes, but those are somewhat harder to compare and contrast,” Pershing said.
From the start, the European scheme will need to apply to every country that imports goods into the EU in order to be compatible with World Trade Organisation (WTO) rules, confirmed Diederik Samsom, an official who heads the team of EU Green Deal chief Frans Timmermans.