US, EU set to discuss carbon border tariff

EU's planned levy to tackle climate change would hit American goods sold in Europe

BRUSSELS • The US and EU have agreed to hold talks on the bloc's planned carbon border tariff, possibly at the World Trade Organisation (WTO), European Commission president Ursula von der Leyen said.

US President Joe Biden met Dr von der Leyen and European Council president Charles Michel for a summit tackling issues from trade to the Covid-19 pandemic. The leaders also discussed issues covering climate change policy, as the European Union's plan to impose carbon emissions costs on imports of goods, including steel and cement, which the Commission will propose next month.

"I explained the logic of our carbon border adjustment mechanism," Dr von der Leyen said after the summit. "We discussed that we will exchange on it, and that WTO might facilitate this."

Brussels and Washington are keen to revitalise transatlantic cooperation on climate change, after four fractious years under former president Donald Trump.

They outlined plans on Tuesday for a transatlantic alliance to develop green technologies and said they will coordinate diplomatic efforts to convince other big emitters to cut carbon dioxide levels faster.

Carbon dioxide is the main greenhouse gas and the majority of mankind's CO2 emissions come from burning fossil fuels.

But the EU border levy could still cause friction. A draft of the proposal said it would apply to some American goods sold in the EU, including steel, aluminium and fertilisers.

The policy is needed to put EU firms on an equal footing with competitors in countries with weaker climate policies, and that countries with sufficiently ambitious emissions-cutting policies could be exempted from the fee.

The United States and EU are the world's second-and third-biggest emitters of carbon dioxide, respectively, after China.

A draft of the EU-US summit statement repeated commitments leaders of the Group of Seven made at their summit over the weekend to "scale up efforts" to meet an overdue spending pledge of US$100 billion (S$133 billion) a year by rich countries to help poorer nations cut their carbon emissions and cope with global warming.

It did not include firm promises of cash, however. Canada and Germany both pledged billions in new climate finance on Sunday, and campaigners have called on Brussels and Washington to do the same.

Brussels and Washington said they will largely eliminate their CO2 emissions from electricity production by the 2030s.

REUTERS

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A version of this article appeared in the print edition of The Straits Times on June 17, 2021, with the headline US, EU set to discuss carbon border tariff. Subscribe