–The EU carbon border adjustment mechanism to encourage copycats.

By Mathew Carr

June 1-11, 2023 — Dr. Michael Mehling is Deputy Director of the MIT Center for Energy and Environmental Policy Research and a Professor at the University of Strathclyde Law School, spoke in a webinar hosted by exchange group ICE about the EU Carbon Border Adjustment Mechanism.

He said other nations that may follow the EU would probably include those in the headline and Canada — others might include the UK and Switzerland. He cited a World Bank map, below.

He outlined some key implementation challenges during the next few years and I include some of the key slides below.

More details of the policy are needed while the policy is implemented.

Emerging nations have said the CBAM smacks of protectionist policy and its implementation has coincided with the US Inflation Reduction Act, a policy which also favors US manufacturers over others.

Mehling is also a non-executive director with Ecologic Institute in Berlin.

CBAM is designed to ensure climate policy does not distort trade; emerging nations have criticized it as protectionist

(Adds note on UK)

notes

UK announcement on March 30:

The UK government has unveiled a series of environmental and energy security policies today (30 March), including a consultation that could lead to the introduction of a border tax on carbon intensive goods.

As part of its ‘Green Day’ announcements, a consultation on “addressing carbon leakage” at the UK border will cover potential policy areas such as introducing a ‘carbon border adjustment mechanism’ (CBAM), mandatory product standards and measures to help grow the market for low carbon products.

The consultation can be accessed here, and will close at 11:59 on June 2023.

Carbon border tax

Under a CBAM, additional taxes could be placed on imports of products that are made using highly polluting processes, partly to safeguard domestic industry from goods produced in countries with less stringent environmental standards.

The UK and EU are expected to increase coordination on their respective CBAMs, reports the FT.

As reported previously by the IOE&IT Daily Update, the EU will implement its own CBAM from 23 October this year.

Full package

Other measures in today’s package include:

• an extra £10bn for UK Export Finance to boost exports, particularly in the clean growth sector
• £160m aimed at kickstarting investment in the UK’s floating offshore wind industry
• £240m in green hydrogen development projects