News and opinion by Mathew Carr
Dec. 13, 2022
The EU’s new market structure is seeking to make global trade more sustainable.
Under the provisional agreement, the Carbon Border Agreement Mechanism will begin to operate from October 2023.
Initially, a simplified CBAM would apply essentially with reporting obligations only. The aim is to collect data.
From then onwards, the full CBAM will kick in. It would be phased in gradually, in parallel to a phasing out of the free EU carbon allowances currently received by the region’s polluting installations. Details of this transition are still not set.
The transition “will ensure compatibility of CBAM with international rules on trade,” the European Council said in a statement (below). Yet, emerging nations are concerned developed countries are using climate policy as an excuse for trade protection. Rich countries have used way more than their fair share of the global carbon budget.
Finance for loss and damage and adaptation has been very slow to arrive in the developing countries. Blockchain technology may be deployed to make transactions more transparent and fair for taxpayers and traders around the world.
The EU’s move could spur the USA (and other nations) to install an explicit carbon price, which would alleviate EU concerns about the market-distortive nature of the US’s Inflation Reduction Act. That act distorts because it essentially gives US companies tax breaks not necessarily available to EU companies.
Explicit Carbon Price Needed: Retweeted by @MChahim