Chinese President Xi Jinping slammed the European Union’s plan for a carbon border levy in a call with the leaders of France and Germany on Friday (16 April), according to state media.
The carbon border adjustment mechanism, due to be unveiled by the Commission in June, would see a price on imports from carbon-intensive countries to protect EU industry from cheaper, climate-damaging competition abroad.
The idea is to prevent “carbon leakage” – EU industry moving to third countries where it is cheaper to pollute. The scheme is likely to be phased in, starting with the most carbon-intensive industries, like steel and chemicals.
But this has raised eyebrows in China, which has previously said there need to be further discussions with Beijing and other trade partners about it.
“Tackling climate change is a shared responsibility … and should not become a geopolitical bargaining chip or used to attack other countries (or impose) trade barriers,” Xi told France’s Emmanuel Macron and Germany’s Angela Merkel on the sidelines of a virtual climate summit on Friday, according to state broadcaster CCTV.
Xi also urged developed countries to “set an example in reducing emissions” and help poorer nations to deal with the fallout from the climate crisis by sharing technology and increasing funding for green projects.
The levy is “a matter of survival” for EU industry, according to Frans Timmermans, the Commission’s climate chief. Although there is little evidence of carbon leakage to date, the risk will grow as Europe moves towards its ambitious target for 2030, the EU executive has said.
The Commission has insisted it is not protectionist and has been careful to avoid calling it a tax, which would breach World Trade Organisation rules, but there is no guarantee that it will not be challenged there.
Efforts in Europe to pressure China into being more ambitious in tackling climate change have to some extent paid off. Last year, the world’s biggest polluter announced plans to peak carbon emissions before 2030 and become carbon-neutral by 2060.
Transitioning from a carbon peak to carbon neutrality in three decades would be “a tough battle”, Xi said.
But while China is diversifying its energy mix, it is still reliant on coal. Its most recent five-year plan focused more on energy security than a green transition, showing little ambition to move away from fossil fuel.
A recent report by TransitionZero also showed that China must shut, retrofit or reverse 364GW of coal by 2030 to reach its 2060 net-zero pledge.
“In order to meet their stated goals, China will need to rapidly accelerate its climate action, including substantially reducing coal capacity this decade,” said Al Gore, the 45th Vice President of the United States, in the foreword of the report.
The report found that China’s new ETS could already be oversupplied by 1.56 billion tonnes – the equivalent of a year’s worth of EU ETS emissions. It concludes that, without reform, the fair value of allowances under the Chinese cap and trade system is zero.
The Chinese leader’s comments come ahead of the US climate summit on 22 April. China has not announced whether Xi will participate and US climate envoy John Kerry is in Shanghai – the first visit by an official from the new US administration – to drum up support from Bejing for America’s drive to address environmental challenges.
[Edited by Zoran Radosavljevic]