From Melbourne's The Age newspaper
The European Union has unveiled a sweeping plan to slash its carbon emissions by 55 per cent before 2030, potentially reshaping the global trading order by imposing border tariffs on nations – like Australia – that do not have some form of carbon price.
“By acting now we can do things another way... and choose a better, healthier and more prosperous way for the future,” European Commission President Ursula von der Leyen said on Wednesday of the plan.
Along with the border tariff, the EU proposes banning the sale of petrol and diesel powered cars within 20 years and planting billions of trees, hiking the tax on jet fuel and providing financial assistance to make homes more energy efficient.
Australia has already repeated its opposition to the proposed carbon tariff [naturally!], which could commence as soon as 2023.
Australian Trade Minister Dan Tehan told the ABC on Thursday morning that such a measure was protectionist and could breach World Trade Organisation regulations[it won't].
The EU argues that a carbon border tariff would simply level the playing field by ensuring that emissions-heavy imported goods such as cement, iron and steel, aluminium, fertilisers and electricity do not undercut European producers who will have to pay more to pollute.
If those goods are coming from jurisdictions where producers pay their own domestic carbon price, that cost would be deducted from the border tariff.
The immediate impact on Australia may be limited because we export few of those goods to Europe.
But by outlining its plan in the months before the crucial COP26 United Nations climate talks in Glasgow in November, the EU is making a bid to create the blueprint for a new world trading order, one that could have profound impacts on Australia’s carbon-intensive exports.
As the world’s largest trading bloc, the EU exerts its own gravity on global trade rules and it is already winning in-principle support from other nations. The fine-print in the vision will be negotiated for two years as the bloc’s industrial powerhouses and 27 member nations work out how exactly to achieve the 55 per cent reduction, so the final policy may scrap some of the more exacting goals.
Despite Brexit, Britain is expected to introduce measures to allow it to integrate with the EU on trade. On a new website dedicated to explaining the tariff, the EU notes that Japan and Canada have already declared their interest in similar schemes.
A White House official said it was “reviewing” the European Commission’s proposals and broadly welcomed the idea of a carbon border tax and after the announcement Congressional Democrats took a preliminary step toward a similar tax, The New York Times has reported.
One of the key architects of the proposed European plan, former WTO director-general Pascal Lamy, told The Sydney Morning Herald and The Age in a recent interview that a border tariff was a measure of precaution rather than protection.
Unless European politicians succumb to political pressure to maintain free carbon credits to its own high-emission industries as negotiations over the final shape of the policy continue, he says, the model would remain in keeping with WTO rules.
Richie Merzian, a former Australian diplomat and climate negotiator who is now director of the climate and energy program at the Australia Institute, says there is a natural logic to other nations using the EU model as a template.
There is widespread acceptance that it is virtually impossible to reach net zero emissions targets – which 131 nations have either adopted or are considering – without some form of price on carbon, says Merzian.
Adopting the EU’s model will reduce compliance costs for nations pursuing such a goal, he argues.
“The EU is trying to bring forward a new norm,” says Merzian.
It's really simple: do you want another country to collect the taxes on your exports, or do you want to collect them yourself? If you introduce your own carbon tax, you won't pay the EU / Canadian / Japanese /UK /US carbon border tax. The EU carbon border tax will drive the introduction of carbon taxes everywhere. So much simpler to introduce your own, keep the revenue and avoid carbon border taxes in other countries. Too bad the right-wing LNP abolished Oz's carbon tax!
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| Source: Carbon border adjustment: a powerful tool if paired with a just energy transition |
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