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EU will introduce carbon emissions border tax: official

Highlights

Deputy DG for energy Borchardt confirms plan at Flame

'Form still under discussion,' examining WTO compatibility

Taxation focus should be on consumption: academic

London — A cross-border levy for carbon-intensive imports into the EU will be introduced in some form, said Klaus-Dieter Borchardt, the European Commission's Deputy Director General for Energy, on Oct. 13.

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Borchardt confirmed in an interview broadcast to an online audience at the virtual Flame conference that such a mechanism is being formulated, but its exact structure is yet to be agreed upon.

"Something like a carbon border adjustment mechanism will come," Borchardt said, "but there will be first some areas where we test it, and [the] form is still under discussion, because you can do it in different forms."

"We are still struggling in finding a way to such a mechanism in a WTO compatible manner. We have different ideas, but ... still work is needed. Maybe [we will first try] it out in some sectors that are less WTO related than others."

In the interview, Borchardt reiterated that this was the expressed will of the current EC president.

Consumption Focus

Also speaking at Flame on Oct. 13, academic Dieter Helm of New College Oxford had previously called for such a regime, while arguing that the current framework for carbon pricing can shift culpability for emissions externally.

"If you want to unilaterally make sure you get to net-zero, the answer is you have to get to net-zero carbon consumption... carbon is not territorial," he said in his address.

"The polluter pays. If you do not pay for the pollution you cause, you will not take it seriously. An economically efficient market internalizes externalities. Carbon would be priced in an efficient economy."

Helm referred to the existing Emission Trading Scheme as a "short term, volatile price, which has to be manipulated by the Commission to try and produce the answer a carbon tax would have produced."

He also argued that the focus should be initially be on the heaviest commercial emitters.