EU DEVELOPING EMISSIONS IMPORT TARIFF

The idea behind the tariff is to stop emissions rendition, that is, sending greenhouse gas-generating industry to places like China and India that have not yet put a cost on emissions and then importing the manufactured goods at the resulting lower prices. (See EMISSIONS RENDITION)

The tariff idea has merit. It might relieve the competitive disadvantage against the rest of the world Europe has bound itself to by conscientiously taking on emissions reduction despite the recalcitrance of powerhouse economies in the US, China and India.

The EU goal is to cut emissions 20% from 1990 levels by 2020.

Opponents fear the requirement on imports of emissions permits would disrupt trade. Right now, the proposal is disrupting European deliberations on the next phase of the Kyoto Protocols. Despite opposition, proponents of the tariff will not give up on the idea.

EU considers carbon tariff as part of climate push
Gerard Wynn, 04 January 2008 (Reuters)

WHO
The European Commission (EC), former French President Jacques Chirac, European Trade Commissioner Peter Mandelson

The EC's idea is to stop "emissions rendition."

WHAT
The EC is debating one of the newest “big” ideas in emissions reductions, an import tariff on goods manufactured in countries without emissions controls.

WHEN
- The tariff is one of many measures being prepared for the post-2012 Phase 3 of the Kyoto Protocols.
- Emissions reductions burdens are expected to climb steadily in the EU from 2013.

Theoretically, an import tariff would level the playing field between regions with emissions caps and the rest of the world. (click to enlarge)

WHERE
- The idea for this tariff is said to have originated with former French President Chirac.

WHY
- European Trade Commissioner Mandelson opposes the idea because it would require implementation complexities and would likely lead to trade disputes.
- The plan would require companies importing goods from countries without emissions reduction policies to buy emissions permits similar to those currently required in order to generate emissions beyond capped levels.
- The French steel sector has spoken out against the tariff.
- Current draft proposals call for broad increases in competitive bidding on emissions permits in Kyoto Phase 3. Power companies will have 50% fewer free credits. Companies generally will have free permits cut 60%.

Right now it's the last item on a long to-do list. (click to enlarge)

QUOTES
Unnamed EC official: "It's very much debated…It's not solved yet."