Italy joins French calls for EU carbon tariff
France and Italy urged the European Union on Thursday (15 April) to impose carbon tariffs on countries that are not part of a global agreement to curb greenhouse gases, an idea opposed by the European Commission and other EU members.
French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi said in a letter to European Commission President José Manuel Barroso that the Commission should include the measures in a report due in June on carbon-emitting sectors.
Some EU members are worried that their industries, which pay for permits to emit carbon dioxide, will lose out to cheaper imports from countries that impose no such charges.
"European law [...] foresees the possibility of including importers in the European system for trading emission quotas," Sarkozy and Berlusconi said in the joint letter.
"The Commission report should define the conditions in which such an adjustment mechanism should be applied to EU borders."
Germany last year criticised the idea of carbon tariffs as "eco-imperialism", saying they would be a direct violation of World Trade Organisation rules.
The European Commission is also against it, saying the measure could set off a trade war with countries like China that could easily spiral out of control.
Other EU members such as Sweden have also spoken out against the plan, while developing countries fear the measure would be a covert form of protectionism blocking out their products.
Sarkozy and Berlusconi said any mechanism should respect WTO rules. They said the measure would encourage more countries to curb emissions.
"Everyone would know that if they refused to take sufficient steps in the concerned sectors, compensation equivalent to the effort made by the EU would be applied to their products," they said in the letter.
According to the Centre for European Policy Studies (CEPS) think-tank, a carbon border tariff could help the EU regain the initiative in global climate talks after the failure of the Copenhagen conference last year.
A carbon tariff, it said in a paper, "would be a straightforward way to move towards a global 'shadow' carbon price" and would be beneficial from an environmental point of view because it would "always [lead to] lower global emissions."
Moreover, it says compatibility with WTO rules and practical considerations are "not insurmountable" and that the proceeds could be used to finance clean tech deployment in developing countries.
The European Commission will in June present a study assessing the economic impact of raising Europe's emission reduction targets to 30% by 2020, anticipating that the costs would be lower in the wake of the recession.
(EurActiv with Reuters.)
Carbon border tariffs have been floated as a way of preventing European manufacturing industries from relocating to countries like China, where environmental laws are less exacting.
The idea was floated in January 2008, when the European Commission presented its climate and energy package, which included a revision of its emissions trading scheme for greenhouse gases (EU ETS) (EurActiv 23/01/08).
Heavy industries, including the cement, steel, aluminium and chemical sectors, argue that tighter control over carbon dioxide emissions would inflate their energy costs to such an extent that they would be forced to move their factories and jobs beyond the EU's borders, leading to a 'leakage' of CO2 emissions without any environmental benefits (see EurActiv LinksDossier on 'carbon leakage').
- June 2010: European Commission report on carbon-emitting sectors and possible move to 30% emissions reduction target by 2020.