EU “carbon tolls” require careful international talks – IEA
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A border adjustment mechanism providing for the introduction of a tax on goods with a high carbon footprint could spawn international trade wars and must be carefully discussed at the international level, the head of the International Energy Agency’s renewable energy department said.

    Paolo Frankl told the Recharge website that the IEA had discussed the matter internally last week while examining a new China-led free-trade coalition in the Asia-Pacific region.

    “We feel if in the West, there was a push to establish this border mechanism without a proper, incredible effort in negotiations, there would be a big pushback from Asia,” he told the website. “And then you enter into a new territory in which the cost [of the mechanism] would be high.”

    Frankl said that it was not just higher costs for companies exporting to the European Union that were at issue, but also the “perception of a big injustice” for those outside Europe.

    He pointed to the “yellow vest” demonstrations that gripped France in 2018 – rooted initially in hydrocarbon taxes imposed on fuel that not only pushed up the price of petrol, but created a sense of injustice for those on low incomes.

    “I fear [that there would be] the same narrative in a carbon tax at the border. The poor who profit from trade will be hit by that,” Frankl told the website.

    “I’m not saying (carbon border taxes) are a wrong idea per se. But my general point is that the transition needs to be just, otherwise it will be perceived in the wrong way.”

    Frankl said “a kind of climate diplomacy” was vital in talks with countries outside the EU on the matter.

    Last year, the European Union launched its “Green Deal” project – which included a provision to include a hydrocarbon tax on goods from countries outside the trade bloc.

    European Commission President Ursula von der Leyen said in September that the EU was introducing the system of carbon duties as a move to persuade trading partners to reduce greenhouse gas emissions. 

    She said that the EU’s governing bodies would adapt EU legislation in such a manner that it would be in line with the aim of a 55% reduction in carbon emissions by 2030.

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