EU Carbon border tariff

The European Union (EU) countries decided to impose the world’s first carbon dioxide (CO2) emissions tariff on imports of polluting goods.

Overview

• Starting from 2020, the European Union (EU) wants to introduce carbon dioxide (CO2) emissions costs on imports of steel, cement, fertilizers, aluminum, and electricity.
• The finer details of the plan are not yet finalized, which will be worked out in future negotiations.
• The aim of imposing this tariff is to protect the European industry, as the European market is flooded by cheaper goods made in countries with weak environmental rules.
• According to the EU, this carbon border tariff is an attempt to create a level playing field by imposing the same carbon dioxide (CO2) costs on EU companies and those abroad.

Benefits
EU held that this move will avoid any carbon leakage and will also encourage partner countries to establish strong environmental rules and carbon-pricing policies. This will also help European Union (EU) countries in their fight against climate change. This carbon tariff proposal is part of EU climate change policies aimed at reducing EU’s carbon emissions by 55% by 2030 from the 1990 levels.

The EU countries and the European parliament increased the pace of negotiations, as from 2023 three-year transition phase for the imposition of carbon tariff will begin.