Border Tax on Emissions Would Hasten Nations’ Carbon Pricing Schemes
Major trading countries could speed up the introduction of effective carbon pricing by imposing a border tax on emissions from imported goods that aren’t already taxed in their countries of origin, according to economist and former New Zealand cabinet minister Peter Neilson.
The scheme would reverse one of the tougher challenges with carbon pricing—that countries or regions that fail to act on climate change gain a competitive advantage over jurisdictions that move faster. With a border tax system, “all countries would then be encouraged to start pricing climate-changing carbon emissions in their products, in order to protect their traders,” Climate News Network reports.
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Neilson, who played a central role in setting up New Zealand’s emissions trading scheme in 2008, now sees a border tax as the kind of urgent response that would help tackle climate change before time runs out. “For a global agreement to cap and then reduce emissions to work, almost every country needs to agree to take responsibility for a share of the globally reducing cap and live with the consequences of eventually lowering its own domestic emissions level, or paying someone else to reduce theirs,” he said. The process should begin with the biggest countries, since “we need a new starter agreement with the potential to grow into a global agreement.”
He cited border price adjustment as a standard international trade tool that “holds out the prospect of a practical solution to the problems that have bedevilled climate change negotiations to date.”
Earlier this month, Ilana Solomon, director of the Sierra Club’s responsible trade program, called for closer alignment between the Paris Agreement and international trade deals like the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership.
“We need to engage in a serious conversation about how to transform our trade policy so that it supports—not undermines—climate policy,” she wrote. “This could include, for example, writing into trade agreements rules that prevent challenges to climate policies,” and “mandating that countries put in place and implement the policies necessary to fulfill their Paris climate commitments.”