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14th Aug 2022

Brussels considering climate tax on imports

  • The carbon tariff on foreign firms would create a level playing field for European companies (Photo: EUobserver)

The European Commission is considering proposing a carbon dioxide tariff on imports from states failing to tackle greenhouse gas emissions, while also considering a toughening-up of the EU's own emission trading system.

According to a draft commission proposal, firms from heavily polluting countries outside Europe would be obliged to buy EU carbon emission permits as part of the bloc's Emission Trading Scheme (ETS), Reuters reports.

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The commission is reportedly still internally divided on the idea, ahead of a raft of proposals on a post-2012 climate change policy which it is due to table on 23 January.

The carbon tariff on foreign firms would create a level playing field for European companies which are currently already bearing the costs of the ETS - a system under which firms can buy and sell excess CO2 emissions, putting an overall ceiling on emissions levels.

The plan reflects pressure by French president Nicolas Sarkozy who argued in October that Europe should "examine the option of taxing products imported from countries that do not respect the Kyoto Protocol," referring to the 1997 international agreement on fighting climate change.

Mr Sarkozy urged Brussels to discuss the implications of "unfair competition" by firms outside the EU, which do not have to abide by strict European standards on CO2 emissions.

But the carbon tax idea has met opposition from EU trade commissioner Peter Mandelson who has said it would be hard to implement and could lead to trade disputes, according to Reuters.

The EU's main trading partner, the US, has not signed the Kyoto protocol, and is already locked in a dispute with Brussels on its plan to include the airlines industry in the ETS.

Meanwhile, the commission draft also foresees more stringent green rules for EU companies after 2012, when the Kyoto treaty expires.

The plan says that by 2020, the total amount of emission permits on the EU market should be 21 percent less than in 2005, according to German paper Handelsblatt.

This means EU firms should slash their CO2 emissions by one fifth on average in the 2013-2020 period.

In addition, from 2013, 60 percent of emission certificates should be auctioned rather than handed out for free to companies - whereas in the 2008-2012 period, firms are getting 90 percent of allowances free of charge.

The plans come at a time when the EU is trying to assume a leadership role in fighting climate change on the world stage - but the commission and member states are bickering continuously on who should bear the burden of CO2 cuts.

New member state Romania has become the latest country to contest the commission-imposed emission ceilings, Reuters reports.

Bucharest on 21 December filed a complaint at the European Court of Justice against a commission decision to slash its 2008-2018 emissions by 20.7 percent and lower its 2007 ceiling by 10 percent.

The move follows similar court action against Brussels by several other member states.

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