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Carbon tax Co-ordination, between the UK and the EU.

 

Carbon
Bri­tain and the EU are boost­ing coordin­a­tion of efforts to tackle cli­mate change and respond to a vast US green sub­sidy pro­gramme, in a sign of warm­ing rela­tions between the two sides.

Rishi Sunak, prime min­is­ter, said this week that Bri­tain and the EU could coordin­ate moves on a car­bon bor­der tax that would place a levy on impor­ted car­bon-intens­ive goods arriv­ing in Europe.

The gov­ern­ment will today launch a con­sulta­tion on intro­du­cing a «car­bon bor­der adjust­ment mech­an­ism» as part of a broader net zero strategy.

Grant Shapps, energy sec­ret­ary, said the con­sulta­tion would address the risk of future «car­bon leak­age», where busi­nesses move pro­duc­tion to a coun­try with weaker cli­mate reg­u­la­tions to avoid pay­ing a car­bon levy.

Offi­cials said the aim was to work with like-minded coun­tries and that the UK and EU were giv­ing ser­i­ous con­sid­er­a­tion to link­ing their car­bon pri­cing sys­tems. «It makes sense,» said one.

Mean­while, Kemi Badenoch, trade sec­ret­ary, held talks yes­ter­day with Valdis Dom­brovs­kis, EU trade com­mis­sioner, to dis­cuss a co-ordin­ated response to US pres­id­ent Joe Biden’s Infla­tion Reduc­tion Act.

People close to Badenoch said Biden’s $369bn sub­sidy pro­gramme threw up sim­ilar chal­lenges for the EU and UK, along with other Wash­ing­ton allies, such as Aus­tralia and Japan. Dis­cus­sions between Lon­don and Brus­sels on cli­mate-related issues are the latest sig­nal of improv­ing EU-UK rela­tions after the res­ol­u­tion last month of a cor­ros­ive row over post-Brexit trad­ing rela­tions in North­ern Ire­land.

The Treas­ury raised the pro­spect of a CBAM (Carbon Border Adjustment Mechanic) in its net zero reviews in Octo­ber 2021 but warned that the pro­cess could be hugely com­plic­ated to imple­ment.

The EU’s CBAM, which is close to approval and will start levy­ing charges in 2026, has already proved con­tro­ver­sial. China has asked for dis­cus­sions at the World Trade Organ­iz­a­tion, say­ing it could be dis­crim­in­at­ory.

sba.tax


What is CBAM

The carbon border adjustment mechanism is a policy measure aimed at reducing the risk of carbon leakage. It works by placing a tax on imported goods that have high levels of greenhouse gas emissions. The idea behind this is to create an incentive for companies to reduce their carbon footprint, as well as to level the playing field for domestic producers who are subject to stricter environmental regulations. The implementation of such a mechanism has been met with both support and criticism, with some arguing that it could lead to trade wars or harm developing countries. However, proponents argue that it is necessary in order to achieve global climate goals and prevent a race to the bottom in terms of environmental standards. Ultimately, the success of a carbon border adjustment mechanism will depend on its design and implementation, as well as broader international cooperation on climate change



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Comments

  1. Stanley30 March 2023 at 09:55

    Carbon leakage is a serious threat as many companies currently do it and should be held accountable for this. There should be clear, swift and serious repercussions for those that always put profit above anything else.

    ReplyDelete
    Replies
    1. Lionel30 March 2023 at 10:55

      I agree completely. This is a very serious matter as our own survival as humans is at stake and we can't let things slide anymore. It's too late. Such companies should both be encouraged to do the right things and punished severely if/when they don't.

      Delete
  2. Claudia30 March 2023 at 12:01

    I don't know if CBAM (the way I understand it) is a good idea. We should stick to doing the easy, simple things first and gradually grow from there. Going for something that is both hard to implement and controversial is not going to help.

    ReplyDelete

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