The EU wants to be climate neutral by 2050, but what about the rest of the world? The European Union has set itself ambitious climate targets, but what if other countries (despite bold promises) fail to cut emissions to the same extent?

The risk is that the EU’s efforts have little positive impact on global emissions, while the European economy suffers from stricter environmental regulations putting EU firms at a competitive disadvantage. Some analysts argue this dynamic is already at play in the EU Emissions Trading System, with European firms having to restrict their emissions or pay a financial penalty while their international competitors aren’t subject to the same constraints. Consumers in Europe may turn to cheaper goods from abroad and, to get around this, European companies may even move production abroad, increasing overall emissions in the process.

Could a Carbon Border Adjustment Mechanism (CBAM) help? Such a border adjustment system would impose a tax on the import of certain raw materials from “less climate-friendly countries” into the EU. The EU hopes that this system will also encourage its international partners to become more involved in climate protection. The proposal has received plenty of support in the European Parliament, but internationally the EU has been accused of protectionism and violating WHO rules. Could a CO2 border tax really lead to stronger global climate protection and better market conditions for European companies?

What do our readers think? We had a comment sent in from Paul (Παυλος) arguing that the EU should force “other big polluters like China” to become more sustainable by making it more expensive to import products with low environmental standards. Would a carbon border tax help to change other countries’ behaviour?

To get a response to Paul’s comment, we put it to Georg Zachmann, Senior Fellow at the Brussels-based think tank Bruegel, where he focuses on energy and climate issues. What would he say to Paul?

Yes, thank you, that’s a great question, because that’s what this thing is ultimately about. Do we manage to change the way other countries produce the goods and services? And the idea is that a CO2 border adjustment mechanism, as is being discussed in Europe, is essentially there to protect our domestic industry from highly polluting imports. But this also gives the other countries an interest to start reducing emissions, to introduce emission pricing systems, to introduce domestic regulations to meet European standards.

But the challenge is that we are talking about countries like China. And will it be possible for the EU, which is a major economic player but not really a geopolitical player, to set standards that are followed in major partner countries that have a lot of political weight? I am somewhat sceptical that countries like the US or China would accept the EU pushing them around in terms of the national legislation they implement. The EU tried that in the past in the aviation sector and it failed dramatically. And there is a higher risk that if the EU tries this now, it could fail again, simply because the 27 Member States of the EU find it difficult to compromise, and also because at the end of the day we need these partners for many other things as well. So, it’s a risky venture to just go out there and push them to do something with some kind of sanction mechanism.

For further perspective, we also put Paul’s comment to Chiara Putaturo, Inequality and Tax Policy Advisor at Oxfam’s EU Office. What does she think?

Thank you very much for the question, so I have to say that it is difficult to give an answer. Because the CO2 border tax has to be tested on a bunch of sectors first to see if it is really effective. And it could indeed have some negative consequences, maybe not so much for China, but in terms of developing countries if their situation is not taken into account. I can explain it briefly: If a carbon border tax is introduced, products imported from developing countries may become less competitive than they are at the moment in the EU market. And this could lead to lower exports to the EU, with potentially negative effects on domestic revenue mobilisation and jobs in developing countries. And this could even undermine these countries’ investments for just change. So, in this sense, the carbon cap and trade tax leads to a disproportionate shift of the burden to the poorest countries, and this also reduces their capacity to address climate change.

We must also remember that we are in a situation where the poorest and most marginalised people are already the most affected by the climate crisis and also the least responsible for carbon emissions. I would like to cite an Oxfam figure: We have estimated that the EU is collectively responsible for 15% of global cumulative consumption emissions between 1990 and 2015, while the poorest 50% of the world’s population who are not OECD countries account for only 7% of total emissions. So we need to take this into account and avoid this tax further increasing the burden on the poorest in developing countries and undermining global environmental efforts.

Our user Greg sees it differently. He says: “A lot of the greenhouse gas emissions come from goods we consume that are made in China. If production is moved back to Europe and consumers have to pay a lot more, Europe’s greenhouse gas emissions will increase.” Is he right?

For a response to Greg’s comment, we forwarded it to Doreen Fedrigo, Industrial Transformation Policy Coordinator at Climate Action Network (CAN) Europe. How would she respond to Greg?

Greg, let’s be clear: we are already paying now. Greenhouse gas emissions do not stop at national borders, so we are paying through stronger and more frequent storms, fires, floods and droughts and other disruptive weather patterns. You are right, though, that we have outsourced much of our pollution and general environmental damage through globalisation because it costs less to produce and environmental laws are weaker in other countries. Of course, any increase in costs will be passed on to the end consumer, i.e. you and me, but we are not talking about significant price increases here.

In any case, we should not fall into the trap of assuming that cleaner, better performing products automatically cost more. This is a myth that some in the industry like to propagate, but eco-design experts argue against it from practical experience. That is why we are calling for more ambitious sustainable product policies. We need to make it easier for people to behave sustainably, not choose between cheap products that break quickly or much more expensive, better quality products. Europe is still a world region that transforms basic raw materials into high-quality products. We are a leader in the solar panel market, and we are on track to do the same for electric vehicle batteries. Our greenhouse gas emissions don’t have to go up if we decide to create the tools to reduce them further. We need high carbon prices, clean production and other sustainable production and consumption tools alongside behavioural changes.

How does Chiara Putaturo from Oxfam see it?

Yes, it’s a good question because it allows me to also talk about the problems of inequality within the EU. There is a danger that consumers will pay more. And that can happen not only if companies move back to Europe, but also if they keep their location in these countries like China, but the cost of the final products goes up. So we have to carefully consider the impact on citizens and on the poorest citizens in the EU, who again are the least responsible for carbon emissions. And here I cite another figure from Oxfam from 1990 to 2015: the richest 10% of EU citizens were responsible for more than a quarter (27%) of EU emissions, as much as the poorest half of the population combined.

So there is a difference in terms of responsibility for carbon emissions between the richest and the poorest in Europe. Against this background, it is important that we first carry out an impact assessment that focuses on consumers, especially the poorest segment of the population in Europe. We should avoid this tax being regressive, so that it burdens the poorest segment of the population the most. If this is not possible, it is important that we consider compensatory measures.

And Georg Zachmann from Bruegel?

I think Greg raises another important issue, which is what is the alternative to goods being produced in China with higher emissions intensity. And our argument in a paper that we recently published called “Carbon border adjustment – much pain little gain” is essentially that there is another way forward, which is to support domestic green manufacturing in the European Union. The idea is, just as we did before with renewable electricity, that we support the production of green steel, green hydrogen and green cement in the European Union. In this way we have domestic production within the European Union and at the same time we develop the technology. This technology can later be taken up by other parts of the world, leading to decarbonisation not only of the European Union but also of our partners.

And this is ultimately a much smarter way of tackling decarbonisation than trying to erect a tax frontier at the border and thus create incentives for dirtier production within the European Union. Because there is then less pressure on domestic producers to reduce emissions if their competitors, who can operate with high emissions, are locked out of the European market. So our proposal is to support green steel, green cement within the European Union, possibly with the money that we have taken in from our higher emissions prices that we have passed on to our steel producers in Europe, and therefore have the triple win that I described earlier.

Finally, what should be done with the money raised by an EU carbon tax? We had a comment from Daniel arguing that the money from the carbon tax should not just go into the general budget of the EU or governments. Instead, it should be earmarked specifically to help Member States switch to renewable energy. Is he right?

We put this question to Doreen Fedrigo from the Climate Action Network. How would she respond to Daniel?

Daniel, according to the European Commission, the money that will come from a CO2 border adjustment scheme is meant as own resources. This means that it would go into the European fund pool to pay back the money that was borrowed to get us out of the economic disaster of the Kovid. 672 billion borrowed from young professionals, youth and future generations as we will pay off this colossal sum over decades. According to the rules of the World Trade Organisation, this money must go back into the environmental measures for which it is supposed to be raised, i.e. climate protection. We will see if the carbon cap and trade system is introduced, but the money should be used to improve the lives of Europeans, to give them cleaner air and water, to prevent irreversible climate change, to adapt to the climate change we are already suffering, to bring us to carbon neutrality and, above all, to ensure that we rebuild societies that are cleaner, healthier, fairer and based on solidarity and inclusion – including making industry pay for its environmental and social damage.

Should there be an EU carbon border tax? Will a Carbon Border Adjustment Mechanism (CBAM) encourage other countries to reduce their emissions? What impact does the carbon cap and trade system have on developing countries? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

88 comments Post a commentcomment

What do YOU think?

  1. avatar

    No – CO2 emissions are the biggest con ever made, and the EU should not be imposing taxes on anyone or anything in its desperate empire-building ambitions.

  2. avatar

    >> Les centrales charbon de Merkel par exemple !

  3. avatar

    Who will finally pay for that? Industrial groups or consumers?

  4. avatar

    It’s the only way, the sooner the better !

  5. avatar

    The EU have to wait until China and India are climate neutral first !!

    • avatar

      Frank Lecluyse China (en ook India dact ik) zou normaal blijven verhogen tot 2030, om dan ongeveer beginnen te verlagen, dit is wat ze zijn overeengekomen met andere landen. Op dit moment is China al een wereldleider wat betreft hernieuwbare energie. En ja, het kan inderdaad zijn dat ze nu nog steenkoolcentrales gaan bijbouwen, maar 32 is niets in vergelijking met wat oorspronkelijk was gepland. In 2017 zijn er nog 107 geplande nieuwe centrales geannuleerd en zelfs nu zijn veel koolcentrales al meer verlieslatend dan hernieuwbare energie daar, het probleem is dat China dringend nood heeft aan meer elektriciteit om aan de vraag te kunnen voldoen en ze hernieuwbare energie niet snel genoeg kunnen uitrollen op de benodigde schaal.Wat betreft India is de hoeveelheid geïnstalleerd vermogen van fossiele elektriciteit vrijwel gestagneerd. Het kan wel zijn dat ze oude fossiele centrales vervangen door nieuwe fossiele centrales. De verhoging van nieuwe fossiele elektriciteit is echter 2-3x kleiner dan de uitrol van hernieuwbare energie in absolute cijfers, wat betreft percentuele groei gaat hernieuwbare energie tot zelfs 5 keer sneller. Aan de huidige snelheid haalt het geïnstalleerd vermogen van hernieuwbare energie deze van fossiele brandstof in binnen ongeveer 8 jaar en zal er meer hernieuwbaar geïnstalleerd vermogen zijn dan het huidige totaal binnen 11-12 jaar, rond de tijd dus wanneer ze beginnen hun uitstoot te verlagen.Dit doet allemaal niets af van het feit dat zowel India als China nog steeds een veel lagere uitstoot per capita hebben als ons, dus het argument dat wij niets moeten doen zolang China en India niets moeten doen stom is. Dat argument kunnen we pas echt maken als we ongeveer dezelfde uitstoot per capita bereiken.

    • avatar

      Ignace Debonne China agreed to reach peak by 2030, maybe they need to step up a bit more to achieve it, that I am not sure about, but this was what was agreed nonetheless. Can you tell me who this “they” is that said 2038?

  6. avatar

    We should make a deal with politicians who keep pushing global warming, if its not 1degree warmer by 2030 they should be in prison for 30 years or until its a degree warmer ( what will mean lifelong)

    • avatar

      Michael De Pauw Nobody of us will be alive by the time the dramatic impact of “global warming” would hit us.. meaning.. anyone can get away with faulty models..

    • avatar

      Mathieu Watteny Depends on what you call “dramatic impact”. Global warming most definitely will have an impact in my lifetime and already has impact now, though these aren’t really obvious unless you look into it and they are overall still pretty limited compared to the future if the temperature rises much more.

  7. avatar

    Si l’ europe ne tient compte que des émissions de gaz à effet de serre depuis son sol ,le deal ne devrait pas être trop compliqué à respecter puisque la grande majorité de nos émissions ( de ce que nous consommons) est fabriqué hors UE et tous les actes les plus polluants également ( cultures céréalières et légumineuses destinées à l’alimentation animale importée en masse rien que le soja : 20 millions de tonnes par an ) idem pour la ferraille et le pétrole qui demande parfois 30 % de l’énergie qu’il contient en énergie extraction etc etc .Et après on viendra donner des leçons aux africains et asiatique du sud est ou même d’ailleurs . Quel monde de politiques et acteurs économiques qui se mentent à eux-même et donc aux autres sans le moindre sentiment de culpabilité .

  8. avatar

    The so called EU Globalist unelected bureaucrats wants to be inquisitive for any thing they hear because isn’t their money is the countries tax payers money

  9. avatar

    How about stopping spending and stopping taxing people?

  10. avatar

    Well sure, the low or zero tax on carbon is a market distortion, in the sense that it’s a real cost to societies in the future that is not charged to producers or consumers today. In other words it’s a hidden subsidy, it’s free lunch. The problem is not whether to tax, but how much. What is the true societal cost of burning one extra ton of CO2 in 2021??

  11. avatar
    EU Reform Proactive

    Should, should, should……? Unfortunately, the FoE/DE uses too many “Should’s”! Advice on such special & technical matters is not for the average voter to give. We are not up to, are powerless & cannot give any meaningful input!

    In general:

    As taxation remains a national competence, where the EU acts as an ADVISOR only- it is in the interest of every EU-affected person to educate themselves first & foremost about the complicated EU concept. Who has the time?

    Just as well one could employ an experienced & reputable global tax advisor to do this job. One can give them a limited scope contract- when complete the national governments can accept or reject- pay them & and say goodbye- next issue- next question!

    Why “marry” into a political system you can’t hire & fire? Such a bureaucratic concept seems too expensive. Why pay so much national tax to sustain a Suzerain who acts just like a think tank would?


    “Taxation is central to national sovereignty. Tax revenues provide governments with the money they need to exist and function effectively. In addition, tax laws reflect the fundamental choices of different EU countries in important areas of public expenditure, such as education, health, and pensions. They influence private consumption and savings and set a financial framework for business activity and environmental issues. This is why the power to raise taxes and set tax rates lie with national governments.

    Question: So what role can the EU play in making taxation fairer, easier, and more efficient for governments, companies, and citizens? “

  12. avatar

    Nee zeker niet .Tax wij betalen altijd op het einde van de rit

  13. avatar

    The EU is getting carbon neutral by pushing all of its industry on China, a country that doesn’t care about the climate and is already choking from all the smoke.

  14. avatar

    Someone has to lead. If the EU already imposes sanctions on its multinationals who break laws anywhere in the world, not only climate actions but also workers rights would improve throughout the world. It would also reduce migration to Europe when people are better treated at home

  15. avatar

    Hypocrisy! ! Hello The old polluting cars are being shipped to Africa with polluting ships! The waste to Asia!

  16. avatar

    Environmental and climate issue is global and it is wrong to use it as a political tool to set trade barrier. Apart from escalate confrontation and retaliation, it can never help solve the problem which needs cooperation.

  17. avatar

    A global issue can never be solved with unilaterally within EU. In this global era, to confront global issue which cannot be blocked by political boundary, it needs to be solved in an multilateral arena i.e. a global summit led by the United Nations. EU ought to avoid individual states from kidnapping the issue for narrow national or even worse individual interest of politicians. EU has no duty to support any political leader for their own election purpose.

  18. avatar

    En fin de compte, c’est encore nous qui payerons la taxe.

  19. avatar

    if the european industry is transferred to asia there will be no more CO pollution, because then no more transport is needed, and much less work relocation. only civil servants to pay support to the people, and that can be done from home.

  20. avatar

    Get things clear and done, especially at geopolitical global level. A sincere green deal should be transparent and global and create justice.

  21. avatar

    You can not put a hold on climat change. It is a natural fenomenen. Just like as the average temperature on earth goes up, the CO2 lowers. Do some research please. The only people who are getting rich from a carbon tax are the CIPS members mentioned in the Paris treaty.

  22. avatar

    taxe sur “les gros pollueurs” !!!!!!!!!!!!!!!!!!!! A quand une taxe sur les génocidaires ? Pensons à la population de RDC (région du Kivu) qui est massacrée, égorgée, décapitée, éventrée, éviscérée,….. – pensons aux enfants qui travaillent dans des mines horribles,…. – pour s’approprier leur terre pour le sous-sol qui regorge de minerais précieux et rares pour;……….. nos batteries de smartphones, de voitures électriques,……………….. – l’Europe est complice de ce génocide ! les “verts” sont complices de ce génocide, nous sommes complices !

  23. avatar

    Belasten lost “niets” op.

  24. avatar

    … but on stupidity, maybe.

  25. avatar

    The unelected EU “leaders” want this. Big difference. You can’t solve all problems with taxes. That is a myth.

  26. avatar

    If so, the effect would be to protect the uncompetitive European industries by creating new rules that would allow to exclude (or tax) the much more advanced Asian and American companies. It is the same for the organic food plan, a protection scheme for the European farmers. The problem with protectionism is that it benefits a minority of industries or producers, but it is a heavy burden for the majority of citizens (and especially the poorer ones), who have to cope with much higher prices for all their goods. And long term it never works, protected industries keep losing expertise and skills, and finally they collapse anyway (after having wasted plenty of taxpayers’ money).

  27. avatar

    Cette bonne grosse arnaque! Plutôt pas non. Y a que les escrocs en cols blancs qu çà intéresse….

  28. avatar

    Allez voir ce que les autres ne font pas Voyez un peu du côté de la Russie, de l Inde, de la Chine, des USA et de l Afrique

  29. avatar

    Let’s build a wall around Europe to keep the polluting undesirables out.

  30. avatar

    Europe will buy ” Clean air ” in poor countries. The whole idea of carbon tax is an effective way to steal money from people. The whole system totally ridiculous. It does not make the environment cleaner.

  31. avatar

    should we stop europe and use the money saved to support climate?

  32. avatar

    No tax on big polluters. Close their factories.

  33. avatar

    I agree with a carbon neutral Europe, a polution free Europe and a social friendly European environment. Countries abiding to the same minimum standards (and control) would qualify for import free access to the EU-market. Factories could qualify if proven.All other countries would be submitted to a green tax, social quality tax and pollution tax. Obviously, the EU should take into account the development levels of poorer countries and invest in local trade and manufacturers with a restricted level of foreign capital participation , so as to stimulate local entrepreneurship.This would stimulate younger people not to emigrate to Europe or to return to their countries.Subsidised local industries should be limited to max 50% of foreign financial capital input (capital + loans).

  34. avatar

    Yeah! More taxes! Your solution to everything, morons!

  35. avatar

    It means That all manufacturing will be moved to China… This is corrupt and wrong… It’s not about making Europe climate neutral it’s about a few people getting filthy rich

  36. avatar

    ALERTE ! Ne laissons pas les abeilles, les papillons et tous les insectes sauvages devenir la propriété des multinationales ! PÉTITION à SIGNER ! et à partager !!!! Dans cette vidéo, découvrez comment les firmes agro-industrielles sont en train de s’organiser pour faire main basse sur le vivant. 21:31 minPS Zéro CO2 is an insane project ! SMART lifestyle shall destroy more our ecosystem than CO2 does. Yes, CO2 is bad for the throath ….

  37. avatar

    Go tax China, the biggest poluter on the planet, with no regards for nature at all on this.

  38. avatar

    Then we Europeans get 30% poorer and there will be hyperinflation. The wealthy will flee Europe.

  39. avatar

    Yes. We need co2 tax.
    And less taxes on income.

  40. avatar
  41. avatar

    Please, don’t give them any more crazy ideas!

  42. avatar

    Where stupid where gonna green us to failliet and other countries will continue and grow rich.

  43. avatar
    catherine benning

    Should there be an EU carbon border tax?

    This question is really asking European tax payers to once again foot the bill for third world government irresponsibility, as well as the individually ‘wealthy,’ to leach off us again. Forcing ordinary people into further poverty through ignorance and therefore, against their will.

    They watch countries led by greedy incompetent leaders, who accept their people’s inability to progress, the kind they see in more affluent countries, and watch the supposed willingness to accept those conditions, as a guide for fleecing our so called ‘developed’ society, by omission or denying truth, in the same way. Then, to make some kind of gesture to calm the masses, hit on those still managing to function, to pay for leaderships past lack of judgement, by now acting to further increase taxation.

    And the joke here is, these global leaders force these horrendous decisions on the public, by greed and lack of loyalty, to those already footing the bill for the Indian, Chinese, and so on profligacy endured for decades. Then have the audacity to return and hit us further in the pocket to fill the billionaires tanks repeatedly. The ignorance in this is astounding.

    Sounds like one of our ‘challenged’ female MP’s this morning, telling us the murder of ‘women’ by ‘men’ in our UK country today, has now reached a level only found in underdeveloped countries violence toward women. And, that reading out their names, along with showing drawings of them, will change this fact. Not one notion in her brain that first of all, men also kill men and the rate is equal or higher than killing of the female. Or, that she and her colleagues brought this situation to our island shores against the will of the public. In order to fulfil a project never put to a vote or discussed with our nations people as priority, before taking action to inject this ignorance on us.

    Of course, they are desperate to hide the truth as the mantra is, we are all equal. Except we are not all equal are we? Just as those billionaires scamming the public at every level are not losing a penny by their desire for this ‘equality,’ as by contrast, ordinary folk are losing everything. Including their life.

    This thread is another piece of propaganda asking your consent to be robbed.

    The third world is responsible for the rise in pollution, the USA, China, India being the highest. The action the West has and is taking will do nothing to bring any kind of balance to that fact. Taking more money out of our pockets to have us join the horror imposed on these people, who try to blame others than themselves for the situation they create and exacerbate, will not correct the destruction we are witnessing. It will simply be another rip off adding to the demise of mankind.

    Leaders unwilling or unable to face reality are terrifying. For if you cannot see or acknowledge what is happening there is no chance of correcting it.

  44. avatar

    The only and Wright sollution is to take away all property of the multinationals and banking system. They have destroyed enough of our ecosystem. We need all the multinationals to be part of the state, and for the decissions, there needs to be an online voting system, where every human being can vote directly. And we also need a fair banking system in the hands of the state for the well being of humans and ecosystem.

  45. avatar

    Eu is 5th on the list of co2 emissions The top 4 should be addressed first

  46. avatar

    2050 is too late anyway. Western word will maybe make it, the rest will fake it. In this one, everybody is getting the short stick.

  47. avatar

    Well, China is the first to be targeted. We all know that whatever we buy has almost surely a made in China component. If we as only ones are willing to pay the burden of the after effect (more expensive import), then what is the purpose of such tax? Why on earth hitting our economies once again? Or does the EU like to be the self tormenting outcast?

  48. avatar

    It almost sounds like the only way. Except the science says we should be carbon neutral by 2030 or before if we want to stand a chance to sustain human life on earth, not 2050. Who came up with that nice round number anyway? See P38 of the summary for policy makers of the last GIEC report: 300gt budget to make it by 80% chance below 1.5C with average 40gt per year = 2030.

  49. avatar

    Do you guys in the EU only think about taxing people while misspending the taxes the people already pay.

  50. avatar

    You should ban all commercial trade agreement with countries which do not reduce carbon emission. Be strong. We are tired Of à weak Europe

  51. avatar

    If it was true that more taxes could change the weather, everyone would be doing it.
    To change the weather, our way of life as we know it, has to change. Like Covid, climate change knows no boundaries and when countries are affected by these changing weather conditions, whether they are guilty or not, they will eventually come to the round table.
    One thing is sure, the change will be harder for industrialised countries, as evident by the present squabbling.
    While they squabble, learn about climate change adaption and mitigation for yourself, change your life and make you own preparations.

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