January 11, 2010
Regarding ‘Carbon tariffs resurface in Copenhagen aftermath‘:
The European Commission held a well attended (although perhaps not well publicised) ‘Carbon Tax’ conference at the end of November. There were a range of speakers including ex-commissioner Kovacs. The economists who spoke made a couple of important points.
First, there needs to be EU environmental tax reform. There was overall consensus that the EU’s Emissions Trading Scheme (EU ETS) coupled with taxes on energy consumption and CO2 emissions not covered by the ETS was the best way forward.
Second, Border Carbon Taxes (BCTs) were supported by the economists on the basis these would be levied on countries outside of the EU which do not implement similar measures. One of the features of the EU-ETS with respect to emissions is that they are independently measurable, reportable and verifiable (MRV) down to the level of individual installations.
One of the problems at COP 15 was that China has decided that it does not want MRV, claiming it would breach its sovereignty. So even if it implemented an ETS (which it has hinted at), since the system could not be independently verifiable, other nations and regions would be suspicious. In such a situation, BCTs seem a reasonable way to go.
In 2009, CEPS (the Centre for European Policy Studies) produced two papers on BCTs. The first in the middle of the year was heavily econometric, the one in December was more approachable. Both had similar conclusions as mentioned in the article i.e. that BCTs would have some benefit (in a world where other nations assume that Europe can make all the effort whilst they continue to emit and increase emissions).
Of course the revenue from BCTs could then be used to fund least-developed nations’ attempts to address climate change, something that the Chinese surely support? But in fairness, the Chinese take the view that much of their emissions are due to exports from China to meet the needs of Western capitalist running dogs.
This is what they said in March 2009. A Chinese official (Gao Li, director of China’s Department of Climate Change), speaking at a forum sponsored by the Pew Center on Global Climate Change, suggested that countries that purchase Chinese goods should be held responsible for the CO2 emitted by the factories that make them in any global plan to reduce greenhouse gases.
“About 15% to 25% of China’s emissions come from the products which we make for the world, which should not be taken by us,”
“This share of emissions should be taken by the consumers, not the producers,” which is a “very important item to make (for a) fair agreement”.
I’d be interested to hear what the Chinese think we should do about this. Do they want us to impose a BCT on their products? Or, not buy their products? (that would cut emissions) What? One thing is clear, there is not an unlimited amount of time to address this issue and so far the Chinese have been less than responsive. As somebody at COP 15 observed, most countries sent politicians for the final negotiations with the aim of introducing some flexibility. China sent bureaucrats, because in China politicians and bureaucrats are the same thing.
Lastly, on the difficulty or otherwise of imposing (or calculating) BCTs, Mr Tilford of CER (the Centre for European Reform) claims that it would “fiendishly difficult” to construct.
PWR has experience of other “fiendishly difficult” trade instruments, and specifically anti-dumping, where the Commission as a matter of course “re-constructs” prices for products accused of being dumped. I’d class that as “fiendishly difficult” but the Commission seems to have little difficulty doing it and justifying it (to the WTO). Thus the “it would be difficult” argument regarding calculating or levying BCTs is an empty one.
The “fiendishly difficult” bit would be calming the Chinese and others if the EU went ahead. But hey, that’s what politicians are for, isn’t it?
Mike ParrLetters to the EurActiv editor