Europe’s Carbon Border Tax Proposal Needs Work
The EU’s proposed “adjustment mechanism” is promising, but everything depends on the details.
Europe’s carbon border tax might not be so green.
Photographer: John Thys/AFP/Getty Images
The European Union recently approved a plan to tax imports according to the amount of carbon emitted in their production. This carbon border adjustment mechanism could be a big advance in the fight against global warming. But it will need more work, and not just from EU policymakers, to succeed as intended.
The basic idea makes sense. Since 2005, the EU has used a trading system to curb carbon emissions. This requires heavy emitters to buy allowances, and their price sets an implicit tax on carbon — currently around €80 ($86) a ton. Producers outside Europe don’t have to pay this penalty and may face little or no regulation imposing comparable costs. This gives their exports to Europe, especially of products such as steel and cement, a competitive advantage.