climate change

The EU eyes plans for a carbon import fee

Steel, a highly carbon intensity product to be inlcuded in an EU carbon border import fee plan. Photo credit: World Steel Association.

By Anders Lorenzen

The European Union (EU), has touted plans to impose carbon border fees on polluting imported goods. It would initially apply to steel, cement and electricity with a view to expanding it to more products and sectors at a later stage, the block said in a statement said last month.

This is a part of the EU’s overall plan to cut emissions to net-zero by 2050 and the European Commission (EC) is drafting plans to introduce the levy for goods coming into any of the 27 EU countries.

The EC plans to propose it next summer in a move to protect EU industry from being undercut by cheaper imports from countries with less stringent climate policies. However, the block plans to exempt the world’s least developed countries and those countries with climate policies matching the ones the EU has set. 

Technically and legally complex

Even if approved, climate advocates would have to wait a few years before the plans would become a reality as it is not before 2023 that the EC plans to move the policy due to the mechanism being technically and legally complex.

At this point is unclear exactly how the authorities will be able to measure how much pollution a given product creates, its carbon intensity or how variable the fees will be.

The EU has said that following the initial goods the levy could be extended to sectors involving aluminium, fertilisers and chemicals. 

The challenges

One of the legal challenges the EU could face would be if it were to be designed within the World Trade Organisation (WTO). The block could, however, seek an exemption from WTO rules on the grounds that the policy would be an environmental tool rather than one that would give EU industry a competitive edge.

Experts are also suggesting that if the EU was to give the cash raised to climate action it could further strengthen its arguments.

Green groups and activists would welcome this policy proposal, though considering the nature of the climate crisis would want it to come much sooner. 

Joe Biden, the US Democratic presidential elect has also said he would enact a similar carbon import fee.

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