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Carbon Border Tax emerges in EU in the guise of protectionism

THE European Commission will tax greenhouse-gas produced by factories outside Europe that ship their products into Europe, reports Bloomberg

04 October 2020 - 19:00

THE European Commission will tax greenhouse-gas produced by factories outside Europe that ship their products into Europe, reports Bloomberg.

The tax is at the heart of the green agenda promoted by European Commission President Ursula von der Leyen.



'We are likely to underestimate the complexities and remaining uncertainties, but for better or for worse the train has left the station and the EU will go ahead with the proposal,' said Michael Mehling, who co-authored the study.



The Carbon Border Adjustment Mechanism is meant to ensure that domestic industries most at risk from stricter climate policies aren??t hurt by EU's Green Deal.



The European Roundtable on Climate Change and Sustainable Transition, a research group in Brussels, expects a price should be put on imports of emissions-intensive goods and funds raised diverted to help pay for Europe's green economy.



'The mechanism will require a broader framework and is no silver bullet on its own,' said Andrei Marcu, one of the authors of the study published by the European Roundtable on Climate Change and Sustainable Transition.



'Starting in 2024-2025 we could see some sort of a pilot programme. I hope it will be a weapon that the EU will never have to use.'



The 27-nation bloc is seeking to tighten its 2030 emissions-reduction target to 55 per cent from 1990 levels. The existing goal, agreed only in 2014, is a cut of 40 per cent. That would have a big impact on industry.



'Europe is moving on emissions, and it can't do that without an instrument that addresses competitiveness,' said Aaron Cosbey, co-author of the study.



The most probable design of the border adjustment would encompass extending the EU Emissions Trading System into imports of selected products, such as cement and electricity, according to the study. As the number of free pollution permits Europe hands out to some companies in the market is set to shrink, the carbon levy could gradually be phased-in to replace them.


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