Over the last 4 years, the EU's carbon price has risen 8-fold. It has just reached a record high, E30.47 (US$36, A$49) You could say, so what? But it matters. Because Europe has got tired of doing all the heavy lifting on averting catastrophic climate change. It also recognises that if carbon emissions produced in the EU are taxed in the EU, while imports from countries without a carbon price are untaxed, then the EU will simply be outsourcing its carbon emissions to the rest of the world. Which won't help reduce global carbon emissions.
So, starting next year, the EU will apply a "carbon border adjustment" to some imports from countries which don't have a carbon tax. The details of exactly how this will work are still unclear. Its impact will be profound. Any small country which trades with the EU will find it an easy decision to introduce their own carbon price and to in turn apply a "carbon border adjustment" to their imports. The simplest way will be to link their carbon price to the EU's. And so, the portion of the world which levies a carbon tax/price will grow steadily. In the end, even large economies will find it easier to charge for carbon emissions than to keep on opting out. The two biggest emitters are China and the USA. They will likely be the longest holdouts. But the need to cut emissions and the desire for tax-free trade will eventually push them to levy a carbon tax too. And that will drive global emissions down very fast.
There are many complexities. The WTO might object to a carbon tax, though they accept VAT, which is similar in that it is levied on imports, but different because it's refunded on exports, while a carbon tax is not, or at least not yet. The pressure to slash emissions will only build as temperatures rise, floods and droughts increase, and sea levels rise.
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