For journalists covering international trade or November’s Glasgow UN Climate Change Conference of the Parties, this National Press Foundation briefing will explore the politics and practicalities of a carbon border tax.
The proposed tax is billed as a way to raise money while requiring countries and companies to curb greenhouse gases emissions. But it’s hitting headwinds in both the EU and the U.S., where discussions for a so-called “carbon border adjustment mechanism” risk antagonizing companies at home and trading partners abroad. Their existence could create diplomatic challenges at the upcoming climate conference.
The concept behind a carbon border tax is simple: Companies in countries with stiff environmental laws and aggressive decarbonization goals are at a disadvantage to competitors in more environmentally lax countries. The tax is intended to equal the cost to the polluting companies to comply with stricter emissions laws in the U.S. and the EU.
Proposals in the U.S. and the EU are aimed at industries such as cement, iron and steel, aluminum, fertilizers and electricity. Companies abroad that want to export to the U.S. would need to pay for the carbon dioxide they emit, negating any competitive advantage they have from making their products in China, India, Vietnam or any country with lax environmental standards.
The downsides: The taxes would make imported products more expensive for American buyers. The tax schemes are also difficult to implement, as U.S. officials would have to monitor whether trading partners were really enforcing emissions laws. And they can impose an extra burden on developing countries.
U.S. and EU experts will discuss how the taxes would work, how they’ll fare politically on both sides of the Atlantic and how the issue might play out in Glasgow. Register to ask questions.
Speakers:
Cándido García Molyneux, Of Counsel, Environmental Practice Group, Covington and Burling LLP, Brussels
Harun Onder, Senior Economist, World Bank
Paola Tamma, Reporter, Politico Europe
This program is funded by the Hinrich Foundation. NPF is solely responsible for the content.