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Carbon tariff

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A carbon tariff or carbon border adjustment mechanism (CBAM) is an eco-tariff on embedded carbon.[1] In 2024 the United States said it is not a carbon tax,[2] but the World Trade Organization has not come to a conclusion.[3] One aim to prevent carbon leakage from nations without a carbon price.[1] Examples of imports which are high-carbon and so may be subject to a carbon tariff are electricity generated by coal-fired power stations, iron and steel from blast furnaces, and fertilizer from the Haber process. Several countries levy carbon tariffs or are considering them.[4]

Existing and forthcoming

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European Union

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This section is an excerpt from EU Carbon Border Adjustment Mechanism.[edit]
The EU Carbon Border Adjustment Mechanism (CBAM, pronounced Si-Bam) is a carbon tariff on carbon intensive products, such as steel,[5] cement and some electricity,[6] imported to the European Union.[7] Legislated[8] as part of the European Green Deal, it takes effect in 2026, with reporting starting in 2023.[9][10] CBAM was passed by the European Parliament with 450 votes for, 115 against, and 55 abstentions[11][12] and the Council of the EU with 24 countries in favour.[13] It entered into force on 17 May 2023.[14]

United Kingdom

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This section is an excerpt from UK CBAM.[edit]
The United Kingdom Carbon Border Adjustment Mechanism (UK CBAM) is a carbon tariff on imports of certain goods produced with high carbon emission into the United Kingdom, similar to the European Union’s CBAM. It will cover slightly different goods, with the list pending consultation in 2024, and is to be rolled out in 2027. The sectors within scope are aluminium, cement, ceramics, fertiliser, glass, hydrogen, iron and steel.[15][16] There are some differences regarding the type of emissions covered. Both EU and UK CBAM cover direct (‘Scope 1’) emissions. Regarding indirect (‘Scope 2’) emissions, the EU covers only emissions from electricity consumed during the production process. The UK CBAM proposals cover more indirect emissions, namely from heat, steam and cooling, as well as electricity.[17]

California

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California has a carbon border adjustment mechanism for imported electricity.[18]

References

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  1. ^ a b "What is a Carbon Border Adjustment Mechanism?". Brookings. Retrieved 2024-11-13.
  2. ^ "What is a carbon border adjustment mechanism (CBAM) and what are some legislative proposals to make one?". United States Congressional Joint Economic Committee. Retrieved 2024-11-13.
  3. ^ Porterfield, Matthew C. "Carbon Import Fees and the WTO" (PDF).
  4. ^ "EU's CBAM to spur other countries to introduce carbon border levies: IETA".
  5. ^ "Why Ukraine peace talks are more about talking than peace". www.ft.com.
  6. ^ Gore, Tim (13 September 2021). "The proposal for a Carbon Border Adjustment Mechanism fails the ambition and equity tests". Heinrich-Böll-Stiftung. Retrieved 3 October 2021.
  7. ^ Oung, Angelica (2 October 2021). "Ministry urges firms to step up decarbonization". Taipei Times. Retrieved 3 October 2021.
  8. ^ Smith-Meyer, Bjarke (14 September 2021). "OECD boss: Digital tax deal can inspire global deal on carbon pricing". Politico. Retrieved 3 October 2021.
  9. ^ Catrain, Lourdes; Seeuws, Stephanie; Schroeder, Stefan; Poll-Wolbeck, Finn; Maruyama, Warren H.; Hawkins, Gregory M. (9 September 2021). "The EU Carbon Border Adjustment Mechanism : inspiration for others or Pandora's box?". engage.hoganlovells.com. Archived from the original on 28 September 2021. Retrieved 22 November 2021.
  10. ^ Hancock, Alice; Espinoza, Javier (18 December 2022). "Brussels agrees details of world-first carbon border tax". Financial Times. Retrieved 20 December 2022.
  11. ^ "Carbon border adjustment mechanism as part of the European green deal". Legislative Train Schedule (European Parliament). 20 November 2022. Retrieved 20 December 2022.
  12. ^ "Results of Votes (22 June 2022)" (PDF). European Parliament. 22 June 2022. Archived from the original (PDF) on 9 July 2022. Retrieved 20 December 2022.
  13. ^ Council (2023). "Voting record".
  14. ^ "Carbon Border Adjustment Mechanism". European Commission. European Union. Retrieved 21 May 2023.
  15. ^ PricewaterhouseCoopers. "UK Government to implement CBAM by 2027". PwC. Retrieved 2024-06-19.
  16. ^ "Factsheet: UK Carbon Border Adjustment Mechanism". GOV.UK. Retrieved 2024-06-19.
  17. ^ "Research Briefing. Carbon Border Adjustment Mechanism". 2024-03-05.
  18. ^ "California ETS Border Carbon Adjustment". Model Laws for Deep Decarbonization in the United States. Retrieved 21 May 2023.
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