The EU carbon club – POLITICO
FALMOUTH, England – EU leaders want their G7 allies to join them in imposing trade barriers on climate laggards – but Japan and the United States are not so sure.
At this weekend’s leaders’ summit in Cornwall, rich countries – who have all pledged to eliminate carbon pollution by 2050 at the latest – will concede they face the risk of industries leaking to countries with weaker regulations, according to a person with knowledge of the latest version of their statement.
An EU official said leaders would discuss “definitely” a plan that Brussels is expected to roll out in July to hit steel, aluminum, cement, fertilizers and electricity with a carbon-based border tariff. on the EU’s carbon price.
If other countries followed suit, it could lead to the creation of a Carbon Club of Nations, in which high-carbon imports are taxed at the border.
But while Japan and the United States recognize the problem, they are not yet ready to support a concrete solution. Neither has put in place a national carbon pricing system. This puts them in a tough spot, especially US President Joe Biden, who is unlikely to get such action from Congress.
Earlier this year, US climate envoy John Kerry urged the EU to wait until after the COP26 climate change conference in November, where other countries were asked to present credible plans to cut emissions. If they do, according to the reasoning, there is no need for a potentially conflicting trade measure.
Japanese government spokesman Tomoyuki Yoshida said the EU’s plans to tax carbon imports were “one of the quite controversial and heated discussions between the parties concerned.”
Likewise, on Friday, Yoshida warned that the G7 should not anticipate the COP26 conference – the United Nations climate gathering that takes place in November in Glasgow, Scotland.
Other G7 members already have a carbon price, but they are not yet joining the EU. The British hosts have not made an official space for discussions on the carbon border adjustments on the agenda. A spokesperson for Prime Minister Boris Johnson said: “This is something the leaders may want to discuss, but I would not want to anticipate it.” It “could happen,” Canada’s High Commissioner to the UK, Ralph Goodale, told reporters on Friday.
The fear from Brussels is that if big economies like America, China and Japan don’t agree to put a price on carbon, EU industries will simply move there and send dirty products back to Europe. – a problem known as “carbon leakage”.
A group of economic experts tasked with advising G7 leaders has supported a “trade mechanism that prevents carbon leaks and helps ensure a level playing field globally.”
Yoshida, the Japanese spokesman, said any measures to tackle carbon leakage should be consistent with trade rules that prohibit discrimination against foreign imports and said such measures must be “realistic”.
Instead of negotiating to tax carbon imports, the G7 plans to support infrastructure investments for renewable energy projects and infrastructure in developing countries, according to two officials with knowledge of the negotiations. Although the plan has been criticized for a lack of new financial commitments.
EU countries say this is not enough. “There is always the question of how much the public sector will give in public investment. But I think we should also demand more and set the framework conditions for private investment to flow, ”said a German official, arguing that carbon prices were necessary to guide private investment.
“So far, we haven’t done much in this area” at previous G7 and G20 summits. “We hope that this summit … will give a strong impetus, or at least a better impulse,” said the official.