This post is by Hannah Dillon, head of the Zero Carbon Campaign.
The European Commission’s proposal to implement a carbon border adjustment mechanism (CBAM) has come under increasing scrutiny over recent weeks, and this is only set to intensify as an increasing number of global leaders focus in on the need to ‘put a price on carbon’.
The European CBAM seeks to level the playing field for EU producers, by applying EU-equivalent carbon prices to emissions-intensive imports. Whilst the so-called BASIC nations – Brazil, South Africa, India and China – have criticised the policy as protectionist, and described it as a discriminatory measure that goes against the principles of the Paris Agreement, others – including the United States – have recognised the importance of the measure in enabling high-emitting nations to deliver on their emissions targets.
Even if proponents of a CBAM do not recognise the criticism that has been raised, it is vital that they engage with it; the consequences of failing to do so will extend far beyond the issue of carbon pricing.
Greening the west can’t happen at the expense of developing nations
Opposition to the European CBAM is viewed in one of two ways. With scepticism, questioning the intent, capacity and willingness of the objecting nations to deliver on their climate commitments, especially where it might threaten their international competitiveness. Or, with appreciation and recognition of the concerns developing nations have about globally relevant climate policies being developed without their input.
The Zero Carbon Campaign takes the latter view. We cannot green western economies at the (perceived or actual) expense of developing nations. Refusal to acknowledge these concerns will not only put developing countries off engaging with the multitude of challenges that climate mitigation brings, but it will also threaten our ability to deliver on the Paris Agreement. We only have to look at the current debate over the proposal to hold an ‘in person’ COP26 to see how this will play out.
With the UK hosting both the G7 and the COP26 climate summit this year, it has an important role to play in navigating mounting criticism over the European Commission’s CBAM proposal. If, as has been suggested, the UK supports CBAMs as an effective climate mitigation policy, it must use its leadership of these events to engage with the opposition and secure a commitment from CBAM supporters to consider how the concerns that opponents have raised might be mitigated. UK leadership is especially relevant in light of the recent commitment to deliver a 78 per cent reduction in emissions by 2035, which will make a UK CBAM all the more likely, and necessary.
In practice, this will mean agreeing a set of principles around CBAM implementation, and carbon leakage mitigation more broadly, that can appease those who have been outspoken against the policy. This includes principles relating to multilateral engagement during implementation, the potential for exemptions for developing nations, as well as the use of revenues; for example, committing to using a proportion of the money raised to help developing nations finance their transition to a low carbon economy.
Carbon border taxes pave the way for a global agreement
Whilst carbon border taxes may appear to be a relatively niche area of climate policy, they have the potential to be so much more. They can be an effective stepping stone towards a global agreement on carbon pricing, or a nail in the coffin of the sort of co-operative climate mitigation that the Paris Agreement relies on. The UK has a history of demonstrating successful climate leadership and is under huge pressure to ensure that this year’s summits are a success. Meeting this challenge by facilitating talks that face, and alleviate, criticism of CBAM is exactly the sort of leadership that will be expected from Global Britain.
