EU Discusses Carbon Tariff

by William Yeatman on January 14, 2008

The European Commission, the Executive Branch of the European Union responsible for proposing legislation, is “considering proposing a carbon dioxide tariff on imports from states failing to tackle greenhouse gas emissions,” reports Mark Beunderman of Euobserver.


Under the draft proposal, the tariff would force EU firms to buy additional emission permits if they import products made in countries lacking mandatory carbon-reduction policies.


That politicians in Kyoto-constrained countries want to tax goods made in non-Kyoto-constrained countries, comes as no surprise. Most of the emissions growth during the 21st century is projected to come from developing countries. The Kyoto Protocol’s ultimate objective—the stabilization of atmospheric CO2 levels—is not even remotely attainable unless China, India, and other developing nations also adopt carbon controls (see p. 7 of this report).


Up to now, developing countries have refused to restrict their use of fossil energy, because they fear poverty more than global warming. So sooner or later, the EU must impose trade penalties on developing nations that refuse to cap their emissions, or Kyoto will collapse. Without such trade penalties, energy-intensive production will migrate from the EU to less regulated economies like China and the United States. Europe will lose production, exports, and jobs, yet emissions will be redistributed globally rather than reduced.


Only one thing seems certain—if the EU slaps carbon tariffs on Chinese goods, China will challenge the legality of the tariffs before the World Trade Organization.

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