Synopsis
The EU is now proposing to tighten that cap further, while phasing out the number of free allowances it has long given to industries exposed to trade competition, like steel.
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The EU proposal still needs to be negotiated among the 27 member countries and the European Parliament before becoming law.
The European Union’s sweeping new plan to tackle climate change includes a proposal that if adopted would be the first of its kind: A carbon tariff on imports from countries that aren’t taking similarly aggressive steps to slash their own planet-warming greenhouse gas emissions.
Carbon border taxes, which have been debated for years, are intended to solve a basic problem. If a single country tries to impose policies to cut emissions domestically, it runs the risk that, for instance, its steel and cement factories will face higher costs and be at a disadvantage to foreign competitors with looser environmental rules. If steel and cement production shifts overseas as a result, that would undercut the climate policy, since those foreign factories would be emitting just as much or more carbon dioxide elsewhere.