IBX-Jakarta. The European Union’s proposal to levy a carbon tax on the carbon emissions linked to the production of goods imported from nations such as India and China has triggered a discussion at the United Nations climate conference in Dubai. This has raised concerns among less affluent countries, fearing that such tariffs might negatively impact their livelihoods and economic progress.
The EU aims to impose a charge on the carbon emissions associated with manufacturing energy-intensive products like iron, steel, cement, fertilizer, and aluminum in other countries. This move seeks to lower emissions from imports and create a fair competitive environment for products manufactured in the European bloc, which adhere to stricter environmental standards. At the COP28 climate conference in Dubai, policymakers are wrestling with a fundamental dilemma: how to encourage global adoption of eco-friendly practices without disrupting the more vulnerable economies of developing nations.
Developing countries are apprehensive that the EU’s planned Carbon Border Adjustment Mechanism (CBAM) could detrimentally affect their economies and render trading with the EU prohibitively expensive. Wopke Hoekstra, the European Commissioner for Climate Action, emphasized CBAM’s primary objective as preventing carbon leakage within the supply chain. He highlighted the tax’s significance in funding and accomplishing the EU’s target of cutting emissions by 55% by 2030.
A recent study by the UN Conference on Trade and Development indicated that a $44 per ton carbon tax would halve emissions from the supply chain. However, it estimated that while wealthy nations could gain $2.5 billion from the tax, poorer countries might face losses of up to $5.9 billion. Countries like Britain, Canada, and the United States are also contemplating similar measures.
Sen. Sheldon Whitehouse and Rep. Suzan DelBene, both Democrats, reintroduced legislation for the “Clean Competition Act,” intending to impose a fee on imports from high-carbon-emitting producers. Whitehouse praised CBAM as a significant step in emission reduction. Addressing concerns from developing nations, Whitehouse asserted that such measures would generate revenue for climate justice and pave the way for “climate safety,” benefiting regions with fewer resources. Despite opposition from India’s government, some experts recognize the need for industries to invest in reducing carbon footprints for both exports and domestic goods.
Critics like Mohamed Adow and Li Shuo view carbon taxes as potential trade weapons that could adversely affect Africa and be a critical issue in international climate politics. Vaibhav Chaturvedi highlighted a technical concern that carbon taxes could contradict U.N. climate change rules that restrict countries from dictating emission reduction methods to others. Trade and climate policy experts acknowledge the fears of many developing nations about potential exclusion from Western markets due to an inability to swiftly clean up their industries. They also worry about being caught in conflicts between China and the West, with China being the primary target of the EU’s carbon tax. K R Raghunath believes that although a carbon tax might cause short-term pain for some countries, its long-term impact will be positive by reducing emissions and benefiting everyone in the long run.
Source: The EU wants to put a tax on emissions from imports. It’s irked some other nations at COP28 (msn.com)