EU carbon border levy shaping up as ‘notional ETS’

(EurActiv, 25 Jan 2021) Revenues from the European Union’s upcoming carbon border charge will be “recycled” to replenish the EU budget and finance the bloc’s green transition, senior officials have said. However, this won’t be the main goal, they cautioned, saying the new levy must pursue environmental objectives to comply with WTO rules.

The European Commission’s proposal for a “carbon border adjustment mechanism” will be tabled in June, as part of a wider package of laws aimed at cutting the EU’s emissions by 55% below 1990 levels before the end of the decade.

“It’s a matter of survival for our industry,” said Commission climate chief Frans Timmermans during an online debate last week, adding that Europe will impose the levy on non-EU competitors unless they commit to lowering their emissions.

Timmermans said the goal is to avoid the risk of “carbon leakage,” whereby companies relocate manufacturing abroad to countries where pollution costs are lower.

Although there is little evidence of carbon leakage to date, “the risk is real,” said Mauro Petriccione, director general at the Commission’s climate action department.

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EurActiv, 25 Jan 2021: EU carbon border levy shaping up as ‘notional ETS’