forumClimate change will occupy an important place on the agenda of the US-EU summit on June 15th, which raises high hopes for the potential role of transatlantic partners in promoting global decarbonization.
There are reasons to be optimistic. The two groups now have common climate goals, and since they account for 40% of global GDP and 30% of merchandise imports, other countries cannot ignore what is happening there. The key question is: How can the European Union (EU) and the United States strengthen their own decarbonization efforts while simultaneously encouraging other countries to move in the same direction?
We believe that the answer lies in the joint introduction of carbon adjustment measures at the border. Carbon adjustment measures at the border include taxation based on the carbon footprint of imported goods. Imposing this tax, which is equivalent to the carbon price in the internal market, is essential for any country that intends to seriously step up its decarbonization efforts.
In fact, the implementation of carbon pricing or strict environmental regulations in order to reduce emissions has the risk of “carbon leakage”, that is, the production of carbon-intensive commodities is transformed into carbon-intensive commodities. Countries that have adopted climate policy measures are weak, and then import these same products from these countries.
In other words, carbon border adjustment is not protectionism, but to ensure a level playing field, because some countries are more serious than others in fulfilling their emission reduction commitments.
As part of the European Green Agreement, the EU has planned to introduce border carbon adjustment measures covering the power sector and energy-intensive industrial sectors by 2023. It can only take effect when it is promoted to all imported goods.
Until 2020, European politicians are worried that the United States will see this move as the beginning of a trade war. But during the presidential campaign, Joe Biden promised to impose taxes on carbon-intensive goods imported from countries that failed to meet climate and environmental obligations.
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