EU proposes world's first carbon border tax for some imports

The border levy should be phased in from 2026. PHOTO: AFP

BRUSSELS/LONDON (REUTERS) - The European Commission on Wednesday (July 14) put forward plans for the world's first "carbon border tax" on imports of carbon-intensive goods, including steel, cement, fertilisers and aluminium, as part of a programme to meet its new climate target.

The border levy should be phased in from 2026, the Commission said. The measure is designed to protect European industries from competitors abroad not subject to the same carbon levies.

A transitional phase from 2023-25 will see importers monitoring and reporting their emissions, a Commission document said.

Under the proposal, importers will be required to buy digital certificates representing the tonnage of carbon dioxide emissions embedded in their imported goods.

Importers may be able to claim a reduction in carbon border costs if the goods have already been subject to a carbon levy in their country of manufacture.

Some 64 carbon pricing instruments such as emissions trading schemes or taxes are in use around the world, in places including China and some US states, not least California. But they cover only 21 per cent of global greenhouse gas emissions, a May report by the World Bank said.

Prices within these schemes also vary greatly.

The Commission has said the carbon border measure will comply with World Trade Organization rules, but the idea has received a hostile reception from trading partners including China and Russia.

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