Details are thin & nothing yet final, but European Commission is consulting on the idea.
What does it say & why am I sceptical?
THREAD
ec.europa.eu/info/law/bette…
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An idea whose time has come?
In this 2010 paper, for example, researchers look at how it could be used to shield EU heavy industry from unfair competition from higher-carbon imports
sciencedirect.com/science/articl…
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See this 2012 paper making the case:
cccep.ac.uk/wp-content/upl…
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1) compliance with WTO rules
2) politics at home and abroad
3) technical implementation challenge
The EC consultation says it will design the measure to comply with (1).
But let's take a closer look at (1)-(3) in turn.
ec.europa.eu/info/law/bette…
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The consultation offers 4 options for a carbon border adjustment mechanism
A) Tax on certain imports
B) Importers must buy EUETS carbon credits
C) Importers must buy credits from a special pool
D) EU-wide tax on certain goods (imported or not)
ec.europa.eu/info/law/bette…
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…option D would be safer for WTO rules but confers tax-raising powers on the EU.
That would be controversial.
Options B/C require major EUETS reform.
reuters.com/article/us-cli…
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Next big problem for an EU carbon border tax is domestic politics.
If you use it to address carbon leakage, then you have to scrap existing anti-leakage schemes.
This is made explicit in the EC consultation:
ec.europa.eu/info/law/bette…
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You think they want to give those up?
carbonbrief.org/qa-will-reform…
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…but that might reopen WTO trouble
("most favour nation" etc)
wto.org/english/thewto…
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🚗What products covered?
🏭What is embodied GHG of prod X from country Y?
🌍Is prod Z from region F different?
⚡️What about Scope 1/2/3 emissions?
The EC consultation asks how to navigate these:
ec.europa.eu/info/law/bette…
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But there is a long road ahead and we are a long way from seeing it implemented in reality.
ENDS/