Green deal
Green deal
Carbon border adjustment mechanism CBAM:
- environmental tax on imports and exports
- carbon neutral by 2050 for the EU block
- European Parliament voted for a plan to raise the cost for firms to produce carbon
- approved in 2020
- finances green projects
Brussels effect
Relies on the domino effect to make the rest of the world follow suit. Climate policy is the first big area where the “Brussels effect” will be properly tested. On issues such as online privacy, where the EU’s norms have become global ones, countries and companies fall in line because it is not especially expensive to follow suit. Likewise, timber producers in Indonesia have to abide by EU rules otherwise they will not be able to sell into its market. In short, the Brussels effect works when following EU rules is an easy or obvious compromise to make. Expecting other countries to mimic an expensive carbon-trading system is a much bigger ask—particularly when all it guarantees is access to a market that will only shrink as a proportion of the global economy.
Get the green right
National taxes are more likely to lead to leakage, where polluting activity shifts across borders.
Carbon prices
Should we put a price on carbon?
As of Oct 1, 2023 a quarter of global emissions are now covered, and the share is rising fast.
Now the price in EU is 80 EUR per tonne of CO2, and it's rising fast. It was 30 EUR in 2017.
1 tonne of CO2 is equivalent to:
- 2,500 miles = 4k driven by an average gasoline-powered passenger vehicle
- 120,000 smartphones charges
- 500 litres of Diesel consumed
A global carbon price would produce far greater economic benefits than border taxes, but would require closer international co-operation.
How woul you tax Imports?? It is hard to calc carbon emissions.
Effects of carbon prices
- push industrial jobs overseas, beyond the reach of emissions-trading schemes
- lower economic activity and raise consumer prices
- it does reduce emissions (A/B test with synthetic control on UK shoed 20-26% decrease)
- encourage green innovation