![]() ![]() The tariff is not initially expected to apply to industries that do not currently face a carbon cost under the EU emissions trading scheme, such as agriculture. Those affected in the short term are likely to be steel, cement, chemicals and fertilisers. It means the tariff will be levelled only on big emitting industries that compete directly with local industries paying a carbon price. The EU has pledged its system will comply with World Trade Organization rules that aim to ensure fair treatment for all. Revenue raised from the charge would be largely used to help pay for the EU’s green transition. Obviously enough, this would do nothing to cut global emissions. The rationale is if it didn’t go down this path there would be a risk of “carbon leakage” – local production shutting down and moving to countries without strong climate policies. The plan was strongly endorsed by the European parliament’s environment committee earlier this month, and is due to be tabled in parliament in June.Īs explained above, the goal is to avoid emissions cuts on the continent being undermined when it brings in goods from countries that are not acting on climate in the same way. The European Commission president, Ursula von der Leyen, proposed a tariff – known as a carbon border adjustment mechanism, or CBAM – as part of a green deal put forward in 2019. The EU is the most advanced in its carbon tariff thinking, with plans to introduce a system no later than 2023. Joe Biden has promised a 2030 target for the US before he hosts a leaders’ summit on climate on 22 April.Īustralia’s major trading partners in Asia – Japan, South Korea and China – have set net zero goals for either 2050 or 2060 and each is considering what they will do by 2030, with announcements expected this year. The European Union and Britain both made commitments late last year to make significant cuts by 2030 (55% and 68% compared with 1990 levels, respectively). Several of the world’s biggest economies are now planning much deeper cuts in emissions under plans to reach net zero emissions by 2050. The idea of carbon tariffs is not particularly new – there have been studies and proposals dating back years – but the global push to cut emissions has accelerated in recent months. No one just yet, but that may soon change. It is to level the playing field so local businesses in countries applying a tariff can compete while this vast global problem is addressed. The idea is not to penalise the overseas companies or – as the Morrison government appears to be suggesting – to embrace old-school protectionism. The answer in some cases is likely to be a carbon tariff – or, if you like, a tax – charged on some products coming in from countries that are not taking similar steps to deal with climate change.
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