Monday

6th Jul 2020

Investigation

Macron's carbon border tax - why hasn't he done anything?

  • French president Emmanuel Macron (r) meeting European Commission president Jean-Claude Juncker in Osaka, Japan at the G20 summit this month (Photo: European Commission)

French president Emmanuel Macron is known for declaring 'grand visions' for Europe, and continuously stresses his commitment to the global climate treaty agreed in 2015 in Paris.

But there is a difference between making speeches and doing the groundwork needed to make visions a reality.

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  • The idea behind a carbon border tax is that any products imported from outside the EU would include the same price on carbon emissions as EU products (Photo: Ted McGrath)

Macron has proclaimed several times that he believed there should be a 'carbon border tax' on products coming from outside the EU.

An investigation by EUobserver shows, however, that France has made little attempt to convince the European Commission or other EU member states that such a tax should be introduced.

"Nothing concrete is on the table," an EU source said on the condition of anonymity.

On 26 September 2017, Macron held a wide-ranging speech at the Paris Sorbonne university that lasted almost two hours.

He said there was a need for a "fair carbon price", so that companies have an incentive to reduce their CO2 emissions.

"If this strategy is to be successful, we must also ensure that our manufacturers that are most exposed to globalisation are on an equal footing with competing companies and industries from other regions in the world that do not have the same environmental requirements," said Macron.

"That is why we should have a European border carbon tax; it is crucial," the French leader added.

A few months later, at the annual United Nations climate summit in Bonn, Macron again called for a European border tax.

He did so again earlier this year, in a speech that was largely a response to the yellow jacket protests.

"The climate must be at the heart of the national and European project," said Macron in April, once more calling for a EU border tax.

Words v action

However, when you want a new tax introduced at EU level, calling for it in speeches is not enough.

The way the EU works, you would need to convince the European Commission to draft a legislative proposal, which would then need to be adopted by the national governments convening in the Council of the EU.

A common approach would be for a country to send the commission letters or papers arguing in favour of the thing you want implemented.

Following Macron's latest mention of the tax, in April, EUobserver filed an access to documents request to see what the French so far had sent to Brussels.

It asked the EU commission all letters, emails, papers, and presentations from the French government arguing in favour of a European carbon border tax, or other carbon pricing measures, as well as any minutes, records or emails summarising the French position about such measures, since 1 September 2017.

Both the commission's directorate-general (DG) taxation and its DG climate action said that the commission did not have "documents that would correspond to the description given in your application".

In other words: France has made no effort to send the commission detailed proposals on how to implement a carbon border tax.

'Never discussed'

The French also did not make any effort to raise the issue in the council.

"It has never been discussed, either at working party level or Ecofin," a council source said on condition of anonymity.

Ecofin is the constellation of economic and financial affairs ministers, meeting in Brussels or Luxembourg.

"Ministers can raise a point on their own initiative. The French have never done that on a carbon border tax," a council source said on condition of anonymity.

By contrast, Belgium and the Netherlands have raised their proposals for an aviation tax at the council, for example on fuel or VAT on tickets.

Such preliminary discussions are needed to find allies, in particular in the area of taxation - where each EU state has a veto.

The non-profit campaign groups Transport & Environment and the Trade Justice Movement are in favour of such a levy, calling it a carbon border tax adjustment.

"Carbon border tax adjustments are import fees levied by countries that put a price on carbon on goods manufactured in countries that do not put an equivalent price on carbon," it explained in a report from November 2017.

"The adjustment is designed to level the playing field in international trade while internalising the cost of climate damage into the prices of goods and services," it said.

The tax could be a way to address Donald Trump's intention to leave the Paris agreement, by making imports from the US more expensive if products are not climate-friendly.

The French permanent representation in Brussels did not want to comment on the record.

A French source told EUobserver that the lack of formal documents did not mean nothing was being done.

"We keep talking and trying to convince others bilaterally," the source said, on condition of anonymity.

"The French position is quite well-known. We keep feeding partners with technical papers," said the contact.

No trade war

But the EU commission still needs convincing. An email from an EU source showed that the commission mainly saw obstacles.

"Border measures on products imported into the EU give several problems: compliance with the World Trade Organization rules is questionable; challenging implementation – it is very difficult to determine how much carbon there is in imported products; border measures can lead to reactions from trade partners – we do not want to enter a trade war in times when we need to foster and lead on international climate cooperation," the source said in an email.

It also said that it would conflict with the design of the EU's emissions trading system, which already includes free allocation of 'polluting permits' to prevent CO2-intensive companies from leaving the bloc.

This echoes the commission's response in 2010, when one of Macron's predecessors called for basically the same thing.

"I will fight for a carbon tax levied on EU borders," then French president Nicolas Sarkozy said.

But then EU trade commissioner Karel De Gucht ruled out such a tax, saying "it will ...lead to an escalating trade war on a global level."

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