{"id":133633,"date":"2019-10-06T12:30:14","date_gmt":"2019-10-06T12:30:14","guid":{"rendered":"https:\/\/www.bnreport.com\/wanted-perfect-design-for-europes-carbon-border-tax\/"},"modified":"2019-10-06T12:30:14","modified_gmt":"2019-10-06T12:30:14","slug":"wanted-perfect-design-for-europes-carbon-border-tax","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/wanted-perfect-design-for-europes-carbon-border-tax\/","title":{"rendered":"Wanted: Perfect design for Europes carbon border tax"},"content":{"rendered":"

The EU wants to set a carbon border tax on imports to protect EU companies forced to comply with tough greenhouse gas rules. It just has to figure out how.<\/p>\n

The idea is to prevent businesses from decamping to laxer jurisdictions \u2014 called carbon leakage \u2014 and to protect them from competitors in countries without their own carbon prices. Border levies flow into the EUs budget, meaning the tax could also help make up a shortfall caused by the U.K.s departure.<\/p>\n

But setting a carbon border levy is fiendishly difficult. The EU will be a pioneer if European Commission President-elect Ursula von der Leyen carries through with her promise to bring in a carbon border tax that would be \u201cfully compliant\u201d with global trade rules. It will \u201cstart with a number of selected sectors and be gradually extended,\u201d she wrote in her political guidelines.<\/a><\/p>\n

\u201cThere is no final plan as such. There are a lot of ideas,\u201d Kadri Simson, the nominee to be energy commissioner, said during her confirmation hearing on Thursday.<\/p>\n

\nBorder levies flow into the EUs budget, meaning the tax could also help make up a shortfall caused by the U.K.s departure.\n<\/p><\/blockquote>\n

The Commissions services are already at work, and Paolo Gentiloni, Italys commissioner-designate for the economy portfolio, is meant to lead on the proposal.<\/p>\n

\u201cWe will try to be very quick and effective on carbon border tax but the legal and technical elements to define are not simple,\u201d Gentiloni said Thursday during his hearing before the European Parliaments Monetary and Economic Affairs Committee.<\/p>\n

Difficult design<\/h3>\n

An EU carbon tax has to be designed to fairly apportion the costs of a products carbon footprint, and to do it while not violating rules set by the World Trade Organization.<\/p>\n

\u201cExactly how this is going to be done, I dont think anybody really knows that,\u201d Cecilia Malmstr\u00f6m, the outgoing trade commissioner, told POLITICO.<\/p>\n

European industries pay a carbon price set by the blocs Emissions Trading System \u2014 currently about \u20ac25 per ton. Foreign companies dont have to pay that \u2014 making their products cheaper. A carbon border tax would make imports pay the same carbon price as domestic products. It should also act as an incentive to other economies wanting to sell to the EU to decarbonize their production processes.<\/p>\n

\n\u201cExactly how this is going to be done, I dont think anybody really knows that\u201d \u2014 outgoing Trade Commissioner Cecilia Malmstr\u00f6m<\/em>\n<\/p><\/blockquote>\n

\u201cWe need to have two objectives, increasing the price of CO2 and carbon tax at the borders. This is the effective way of increasing the cost of CO2 while avoiding the competition biases with Indians, Chinese or others,\u201d French President Emmanuel Macron told reporters last month.<\/p>\n

Berlin and Paris said theyre open to \u201cexamine possible measures to prevent carbon leakage, notably a carbon border tax\u201d in a joint statement<\/a> last month.<\/p>\n

Global trade rules forbid discrimination between imports and domestic goods; a carbon tax could be allowed on grounds of environmental protection, as long as its not protectionism in disguise, and its equivalent to measures imposed on domestic products. If the levy violates WTO rules it could open the EU to retaliation from the U.S. and other large trading blocs.<\/p>\n

\u201cThe key is to structure any accompanying border measure as a straightforward extension of the domestic climate policy to imports,\u201d trade law professor and former WTO Appellate Body member Jennifer Hillman wrote<\/a> in 2013.<\/p>\n

To ensure WTO compatibility, the border price needs to be equivalent to the domestic one, and thats not easy.<\/p>\n

One option the Commission is looking at is to use the annual average carbon price paid by a specific EU sector as a benchmark for a tariff. Imports produced with fewer emissions than their European equivalents, or which are already subject to an equal or higher carbon price at home, would be exempted.<\/p>\n

\nBerlin and Paris said theyre open to \u201cexamine possible measures to prevent carbon leakage, notably a carbon border tax.\u201d\n<\/p><\/blockquote>\n

To do that, the EU would have to devise a way to calculate the carbon intensity of a product \u2014 hitting dirtier products harder than clean ones.<\/p>\n

\u201cThis is a big issue \u2026 And it gets very, very technical,\u201d said Henrik Horn, a fellow at the Bruegel think tank.<\/p>\n

A carbon tax also means a revolution in the blocs Emissions Trading System (ETS). The current system of giving free emissions allowances to energy-intensive industries as a way to combat carbon leakage would have to be scrapped; everyone would have to pay the same.<\/p>\n

\u201cIf industry will have a [carbon] border tax, what is the purpose of giving free allowances as well?\u201d said a senior EU officiRead More \u2013 Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The EU wants to set a carbon border tax on imports to protect EU companies forced to comply with tou..<\/p>\n","protected":false},"author":1,"featured_media":133634,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-133633","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nWanted: Perfect design for Europes carbon border tax - Business News Report<\/title>\n<meta name=\"description\" content=\"The EU wants to set a carbon border tax on imports to protect EU companies forced to comply with tou..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/wanted-perfect-design-for-europes-carbon-border-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wanted: Perfect design for Europes carbon border tax - 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