Under the latest reforms, the quantity of free emissions allowances will be phased out between 20. Green recovery or 'nightmare' for trade? Europe wants to tax emissions from ships Photographer: Alex Kraus/Bloomberg via Getty Images Alex Kraus/Bloomberg/Getty Images Germanys economy shrank the most in at least half a century in the second quarter, outlining the scale of the challenge facing Europe after the devastation of virus restrictions that slammed businesses and households. ![]() Shipping vessels Ever Greet, operated by Evergreen Marine Corp, left, and Umm Qarn, operated by Hapag-Lloyd AG, sit docked at the HHLA Container Terminal Burchardkai (CTB) as night falls at the Port of Hamburg in Hamburg, Germany, on Tuesday, Aug. The ETS, which on Sunday was extended to shipping, is key to the European Union’s bid to become the world’s first carbon-neutral continent. The EU carbon market, known as the Emissions Trading System (ETS), already caps greenhouse gas emissions from more than 11,000 power and manufacturing plants, as well as all internal EU flights, covering some 500 airlines.Ĭompanies receive or buy emission permits or “allowances,” which can subsequently be traded. The carbon border tax is part of a wider deal agreed to Sunday that reforms the EU carbon market to cut its emissions 62% by 2030, compared to 2005. She added that certifying carbon emissions in producing countries remains a “challenge.” The EU carbon measure could lead to a “rapid deindustrialization” of African countries that export to the European Union, warned Faten Aggad, a senior adviser on climate diplomacy at the African Climate Foundation.Īnother risk is that clean energy capacity in poorer countries will simply be shifted to the production of exported goods while industry aimed at local consumption relies on dirty fuels, Aggad said on Twitter. In a nod to the challenge posed by the Inflation Reduction Act, the latest EU deal makes more money available for the development of clean energy technologies in Europe. The European Union and the United States have already butted heads over President Joe Biden’s $370 billion climate plan under the Inflation Reduction Act, which EU officials say will hurt European companies selling into the US market. “There are a lot of concerns coming from our side about how this is going to impact us and our trade relationship,” US trade representative Katherine Tai said at a conference in Washington last week, according to the Financial Times. “It is one of the only mechanisms we have to incentivize our trading partners to decarbonize their manufacturing industry,” he added.īut the plan has been met with resistance by countries including the United States and South Africa, which are worried about the impact that carbon border taxes could have on their manufacturers. Mohammad Chahim, a Dutch socialist politician who has led negotiations on the law for the European parliament, said in a statement that the measure will be a “crucial pillar” of European climate policies. 'Not how you treat friends.' Biden's climate plan strains trade ties with Europe Photo by Krisztian Bocsi/Bloomberg via Getty Images. Under the new mechanism, companies will need to buy certificates to cover emissions generated by the production of goods imported into the European Union based on calculations linked to the EU’s own carbon price.Īn employee works in the wheel arch of an Audi Q4 e-tron electric vehicle (EV) at the Volkswagen AG EV plant in Zwickau, Germany on April 26, 2022. ![]() It also disincentivizes EU companies from moving production to more tolerant countries, something that EU lawmakers refer to as “carbon leakage.” The measure will apply first to iron and steel, cement, aluminum, fertilizers, electricity production and hydrogen before being extended to other goods. Carbon-intensive industries inside the bloc must comply with strict emissions standards, and the tax is designed to ensure those businesses are not undermined by competitors in countries with weaker rules. ![]() ![]() The landmark measure adds a pollution price on certain imports to the European Union. European Union governments have reached a deal on the world’s first major carbon border tax, as part of an overhaul of the bloc’s flagship carbon market that aims to make its economy carbon-neutral by 2050.ĮU ministers finalized details of the Carbon Border Adjustment Mechanism early Sunday after reaching a provisional agreement earlier on in the week.
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