Carbon border tax needed to ensure “survival” of EU’s industry

The European Union will introduce a carbon border tax on non-EU countries unless they commit to lowering their emissions, according to Frans Timmermans, European Commission executive vice-president for the European Green Deal.

The European Commission is expected to propose its carbon border adjustment mechanism before the end of June as part of a broader package of climate laws aiming to cut emissions by 55% before the end of the decade, according to a report by Euractiv.

The mechanism intends to apply carbon pricing to goods entering the EU in order to create a level playing field from the industry’s point of view. It could heavily affect the countries in the region as well, except Montenegro, which has already introduced a carbon pricing scheme similar to the EU Emission Trading System (EU ETS).

The more countries adopt carbon pricing, the less need there will be for adjustment mechanisms at the border

Timmermans expressed the hope that other major emitters will soon adopt carbon pricing policies as well, citing China’s pledge to go carbon neutral by 2060 and pledges by the incoming US administration to rejoin the Paris Agreement.

“The more countries and regions adopt carbon pricing mechanisms, the less need there will be for adjustment mechanisms at the border, and that’s what we’re pushing for,” he said at an online event organized by Global Counsel.

A United Nations Climate Change Conference of the Parties (COP 26) in November is the deadline for nearly 200 countries to pledge deeper emissions cuts.

We will have to protect the EU

When asked whether the EU will impose a carbon border adjustment mechanism as a unilateral move if COP 26 is not successful, he answered: “Yes, yes, without any doubt.”

“Also, because our recovery plan is based so much on the European Green Deal, we will have to invest in the transformation of our industries, which is going to be difficult, and it’s going to have a cost effect and lead to risks of carbon leakage,” Timmermans said, adding that these risks will have to be addressed.

“It’s a matter of survival of our industry. So if others will not move in the same direction, we will have to protect the EU against the distortion of competition and against the risk of carbon leakage,” he explained.