EU’s Carbon Border Taxes and Joe Biden’s Clean Energy plans: A double threat for developing countries

From The GWPF

Vijay Raj, India Date: 14/01/21

The introduction of the European Union’s Carbon Border Taxes and Joe Biden’s announcement of Clean Energy plans has raised double alarm in developing countries.

The new European Carbon Border Adjustment Mechanism (CBAM) law will impact all countries exporting to EU, especially those countries without carbon pricing mechanisms. Countries like India, China, Indonesia, Philippines, and even developed ones like Australia, Poland are likely to significantly affected by the CBAM.

Climate Justice and Carbon Border Taxes

The European Commission introduced the idea of CBAM in December 2019, as part of its EU Green Deal. The CBAM is likely to become a reality in 2021. But the EU’s large-scale climate-sanction through its CBAM will be treated with hostility in India, China and most developing countries.

Developing countries will view the CBAM as incompatible and inconsistent with the climate justice principle, a principle that is recognised by the parties of Paris Agreement, allowing developing countries to continue to use fossil fuels as well as receiving $100 billion p.a. in climate funds.

Big developing economies like India, Brazil, and China have always argued that the per capita emissions in the U.S. and EU are much higher than their own economies, and thus have rejected attempts by developed nations to introduce carbon border taxes in the past.

A CBAM at this juncture will cause more frictions among the nations and lead to greater objections to the commonly agreed goals under the Paris Climate Agreement.

Potential impact of CBAM and responses in India

India has called for a legal analysis of the deal to make sure that the proposed taxations from EU and U.S. do not impact its industries and economy.

Morgan Stanley’s review predicts that a carbon tax of $40 per ton of emissions will increase the cost of producing aluminum by more than 20% in China and India.

As a response to these taxes from EU and the U.S., the developing countries may introduce taxes of their own as a counter-measure to absorb the damage from the loss in export revenue and to signal their displeasure.

India and U.S. for example were involved in a tax-tussle during Trump’s term, where India reacted to U.S. taxations with counter-taxes on U.S. imports. EU imports a wide range of commercial and industrial products from India including chemicals, fabric, cement, and metals, and the CBAM will affect all these industries. The CBAM would impact most large industries in these sectors except for few Indian cement producers like Dalmia Bharat and Ambuja Cements as they’ve already taken measures to reduce carbon emissions.

Biden’s plans and energy use in developing countries

To make things more challenging, similar climate policies announced by the incoming Biden administration means that countries like India should also prepare for an US-influenced disruption in the fossil fuel sector.

Biden administration is likely to roll out its clean energy plan which has called for policies and actions that will aim to achieve a “carbon free power sector by 2035”.

The official page states that the policy will be “one that will put the United States on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.”

It remains to be seen how this transition policy will apply to the U.S. exports of oil, gas, and coal, especially for importers like India. The Trump administration highly favoured the production and export of oil, and it is still unclear if it will be the same during Biden’s administration.

Source: US Energy Information Administration

The U.S. petroleum exports doubled between 2015 and 2019. Among its biggest customers are developing countries like India, Brazil, and Mexico. All these countries could see a disruption in oil imports under Biden administration.

Likewise, the US natural gas exports were on an increase in the past three years. Among the developing countries, Mexico, India and Chile were the biggest importers of US Liquid natural gas in 2019.

India particularly has been heavily reliant on US oil and gas. India’s LNG imports from U.S. skyrocketed from around 21,000 million cubic feet in 2017 to around 92,000 million cubic feet in 2019.  

A Biden administration constraint on US oil and gas production would put the Indian oil and gas sector in trouble, especially when they have begun to move away from their traditional suppliers in Middle East like Iran.

But it is quite uncertain as to how fossil fuel exports or the trade relationships will evolve in the next few years. India, for example, has expressed its interest in resuming oil imports from Venezuela and Iran, as it believes that a Biden administration would ease the sanctions that currently restrict oil exports from these countries to India.

The EU meanwhile struck a major trade deal with Beijing during the final days of 2020 despite all the rhetoric surrounding CBAM and reservations expressed by Biden’s energy team. It will give European companies greater access to Chinese markets.

EU’s desire to make financial gains through a trade deal with China, despite the latter’s active involvement in the growth of fossil fuel market in Asia and Africa, shows the EU’s hypocrisy when it comes to walking the talk on CO2 emissions. It makes their CBAM hypocritical and selective policy that has turned a blind eye to the largest consumer of fossil fuels in the world.

Given the complexity of the fossil fuel trade relationships, the West’s defiant stand to reduce fossil fuel consumption, and EU’s surprising decision to make a significant trade deal with the biggest fossil fuel consumer China, it is difficult to predict the impact of CBAM and the Clean Energy plan on the overall trade relationships.

The CBAM will likely cause industry-level adjustments in major fossil fuel countries like India, which may eventually lead to compromised growth and prolongation of the deadlines to achieve developmental targets. It will eventually impact the consumers and the economy which is already reeling under the impact of COVID-19 lockdown.

Read the full article here.

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January 14, 2021 10:21 pm

At the top of the Biden Agenda will be extracting increased tribute for his Family from China. The rest can go and eat the grass.

Joel O'Bryan
Reply to  nicholas tesdorf
January 15, 2021 1:01 am

… and bugs (grubs and meal worms, yum).

beng135
Reply to  nicholas tesdorf
January 15, 2021 11:24 am

And China will be extracting more from him, his family and thru Biden, loot from the US taxpayers.

Last edited 6 months ago by beng135
Warren
January 14, 2021 10:30 pm

Don’t be ridiculous they’ll be exempt.
Only White people must pay.

PCman999
January 14, 2021 10:45 pm

How can these obviously protectionist measures be legal under the WTO treaty?

Rod Evans
Reply to  PCman999
January 15, 2021 3:38 am

The EU only takes part in WTO committee sessions to act as an inhibitor or disruptor. They have no desire to advance world trade. One look at the decline of the EU’s percentage of world trades tells you all you need to know about its priorities and intentions on free trade. It is against it.
The EU is a self protectionist group of declining economies. The mystery is, why it is still in existence?.

tonyb
Editor
Reply to  Rod Evans
January 15, 2021 8:50 am

The Eu’s share of world trade is 15% and declining. It is easy to see why many countries like to deal with China as basically they dont try and moralise.

Waza
January 14, 2021 10:47 pm

The Paris agreement required $100 Billion in funds to go to developing countries.
Well, at least that is how it was marketed to me.
It is actually only required that developed countries provide $100 B in FINANCE to developing countries.
What has been happening is developing countries receive climate grants at the expense of normal aid, plus they can get loans for renewable white elephants.
The only one who benefits is the “manager” of the climate fund.

Any climate taxes will end up the same way. The “manager” is the only one to gain.

Peta of Newark
January 14, 2021 10:51 pm

New taxes are perfectly symptomatic of economies that are dead on their feet

Patrick MJD
January 15, 2021 12:05 am

China knows there are markets that are expanding and will be bigger than the combined market potential of both the US and EU. Africa, the rest of Asia, South America etc.

commieBob
Reply to  Patrick MJD
January 15, 2021 2:20 am

OMG this is complicated. Do your own web searches because there is no single source that sums things up sufficiently that you wouldn’t need to read anything else.

China has a policy of self-sufficiency. Could China close its borders and tell the rest of the world to go suck eggs? China kick started its modern economy off the US economy but it has a huge underdeveloped domestic economy. Its middle class already outnumbers the American middle class but the vast majority of the country isn’t there yet.

Much is made of the US debt to China but, by some measures, the Chinese debt is huger.

China is already very busy in Africa.

If the US and EU* become nasty, India is in trouble. I’m not sure about China though. Could China lead the BRIC countries the same way the US has dominated the world’s economy? Hold on to your seats folks. Some folks think the American hegemony is over. link

Lots of people were scared spitless when President Trump tightened the screws on China. He knew what he was doing in a way that Biden doesn’t. I’m scared spitless about what will happen if the US and EU try to tighten the screws on the rest of the world.

*In French, EU is an acronym for Etats Unis … States United … ie. the United States backwards.

Patrick MJD
Reply to  commieBob
January 15, 2021 2:57 am

Yeah, OK, China started down this path 30 years ago. It’s just getting started.

rleewinters
Reply to  Patrick MJD
January 15, 2021 6:08 pm

30 years ago China figured out that they needed a billion people to become productive or China would never achieve greatness. American style capitalism and entrepreneurship was introduced and China has become great again. The only difference between China’s current and Germany’s 1930’s and 40’s National Socialism (Nazi) socio economic and governmental systems is that capitalism pre-existed in Germany. The CCP had to reintroduce capitalism to China. They ain’t communists anymore and they won’t go back to it. They’re Nazi’s now.

MarkW
Reply to  commieBob
January 15, 2021 2:07 pm

I suspect that both China and India are better positioned to survive a trade war than is either the US or EU.

Serge Wright
January 15, 2021 12:53 am

My guess is that the developing countries will use their muscle in the UN to force a backdown by the EU, so the sanctions would only apply to non-conforming western countries.

From a climate perspective, we need to remind ourselves that the UN doesn’t regard CO2 as a problem. We know this because UN climate policy is all about imposing cuts onto developed countries that emit the minority of atmospheric emissions and whose emissions reached saturation back in 1980. The only potential emissions yet to be realised lie in the developing world, where there are almost 2x the current global emissions waiting in the development cycle pipeline, on top of the 2/3 global emissions they already emit today.

Put simply, the UN climate agreements have driven up atmospheric CO2 faster than would have otherwise been the case, by forcing relocation of industry from the west and speeding up the pace of development in the developing nations that are home to 85% of the world’s population. The UN would have been fully aware of the CO2 outcome of their climate policy from it’s inception back in 1992 and significantly they have made no changes to the CO2 exemptions despite a doubling of global emissions since that time, all coming from the developing countries. The only conclusion that can be drawn from the UN climate agreements is that they were (and still are) fully intended to drive up emissions, with the main purpose being to provide financial benefit to developing countries, at the expense of western countries.

In this sense, the UN policies have been extremely successful, in particular for China who has achieved the double fortune of cashing in on the industrial exodus from the west, and at the same time, selling it expensive and worthless RE infrastructure in return, hastening the west’s demise. These new CO2 laws put forward by the EU will only act to hasten the demise of EU industry, creating a more isolated and impoverished EU community, where more member nations are forced to exit. But they will also increase the rate of CO2 emissions and development in the developing world, which pleases the UN and China.

Joel O'Bryan
Reply to  Serge Wright
January 15, 2021 1:03 am

The Climate Scam was always and only meant to apply to the Western capitalist economy nations.

Serge Wright
Reply to  Joel O'Bryan
January 15, 2021 1:10 am

And yet so many people in the west are either blind to the scam or choose to support the scam, along with the rising emissions it generates and economic harm it causes to their own country.

MarkW
Reply to  Serge Wright
January 15, 2021 8:59 am

And meanwhile, western media is loudly proclaiming that anyone who supported Trump is a terrorist and worse than Hitler.

beng135
Reply to  Serge Wright
January 15, 2021 11:35 am

That what cult members do — defend the cult at all costs.

Last edited 6 months ago by beng135
Newminster
Reply to  Serge Wright
January 15, 2021 3:19 am

Quote by Ottmar Edenhoffer, high level UN-IPCC official:  “We redistribute de facto the world’s wealth by climate policy…Basically it’s a big mistake to discuss climate policy separately from the major themes of globalization…One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore.

’Nuff said?

Joel O'Bryan
January 15, 2021 12:59 am

The Great Darkening is coming.

Not because of fossil fuel scarcity,
but exactly the opposite,

because of Fossil Fuel abundance…

and Global Socialism

Matthew Sykes
January 15, 2021 2:09 am

When are we going to take this lie down?

Newminster
Reply to  Matthew Sykes
January 15, 2021 3:20 am

When we stop taking it lying down!

RonK
January 15, 2021 2:11 am

sure hope everyone has a lot of popcorn, this will prove to be really interesting. wonder what kind of accommodations they will make for Russia, and China, when EU cannot get the gas it needs or some of the rare earth elements they need from China

Rod Evans
January 15, 2021 3:32 am

Well if you are going to accelerate deindustrialisation, you gotta start somewhere. As Greta might have said, if she had any sense of timing. CBAM!!
How much longer are we going to put up with these nonsensical committee led impositions of the freedom to live and for the bulk of the world’s people the freedom to grow out of barely sustainable poverty.

cedarhill
January 15, 2021 5:09 am

The Hallmark of Socialism (all versions) – the first generation under socialism either escapes or only sees degrading of their lives. It’s the second, third and later generations that experience the havoc, misery and hopelessness. I.E., it’s mild arc downward until the hyperbolic descent drops them into the chasm. With Covid, Climate, etc., the descent is approaching far more rapidly then most believe.

Joseph Zorzin
January 15, 2021 5:50 am

“The Energy 202: Biden’s new hires show West Wing will be center of gravity on climate push”

https://www.msn.com/en-us/news/politics/the-energy-202-biden-s-new-hires-show-west-wing-will-be-center-of-gravity-on-climate-push/ar-BB1cMGr5

Last edited 6 months ago by Joseph Zorzin
January 15, 2021 6:38 am

Biden should help clean up the developing world’s exotic mining tragedy.  The enormous amounts of money being allocated for solar and wind — and the never-ending extensions of the tax credits for them — shows that energy policies in Washington and California continues to support the environmental degradation and humanity atrocities in the foreign countries that are supplying the exotic minerals and metals to support wind turbines, solar panels, and EV batteries.
https://www.cfact.org/2021/01/09/biden-should-help-clean-up-the-developing-worlds-exotic-mining-tragedy/

ResourceGuy
January 15, 2021 7:03 am

The Great Carbon Depression is coming….

Smoot-Hawley Tariff Act Definition (investopedia.com)

CD in Wisconsin
Reply to  ResourceGuy
January 15, 2021 9:17 am

Totally agree ResourceGuy!

Quote:
“The Smoot-Hawley Tariff Act of 1930 raised U.S. import duties with the goal of protecting American farmers and other industries from foreign competition. The act is now widely blamed for worsening the severity of the Great Depression in the U.S. and around the world..”

Those who do not learn anything from history or heed the lessons of history’s mistakes are doomed to repeat them. We will all pay for the stupidity and ignorance of the politicians here in the U.S., in the EU and globally, especially as a result of their scientific illiteracy on climate.

MarkW
Reply to  CD in Wisconsin
January 15, 2021 2:09 pm

Like they keep telling us about socialism. This time we will make trade protectionism work.

ResourceGuy
January 15, 2021 7:04 am

New money for old money

MarkW
January 15, 2021 8:54 am

Europe and most “developed” countries have already shipped a large portion of the manufacturing to the third world.
If the third world stops trading with the “developed” countries, the “developed” countries are going to be in a world of hurt very quickly.

DMacKenzie
Reply to  MarkW
January 15, 2021 9:49 am

The “evils of industrialization” meme seems to be an easy sell for money, fame, and vote seekers, even though most industries are a result of mass demand for beneficial goods and services. Transfer of smokestack industries to places where people need jobs is the inevitable result. Insufficient wealth production in the countries where those industries used to be, will correct the imbalance in a way that the once-wealthy country does not consider “fair”.

Pat from Kerbob
January 15, 2021 10:01 am

Another line item for discussion in the climate change POLICY crimes against 3rd world humanity trials.

markl
January 15, 2021 10:19 am

If you read Agenda21 this falls under the category of “convincing non compliant states” to fall in line. Like all else in Agenda21 everything is supposedly “voluntary” (a word that keeps being repeated throughout the document) but mentions there are non forceful ways to convince the hold outs that can be used. Like this. Get ready for One World Government.

MarkW
Reply to  markl
January 15, 2021 2:11 pm

For some reason, the phrase “We have always been at war with EastAsia” comes to mind.

ResourceGuy
January 15, 2021 11:38 am

Is there a carbon tax on sea rescues, tents, immigrant applications, and wine? Does the tax apply to Nordstream 2 imports?

ResourceGuy
January 15, 2021 11:40 am

Let me guess, there was no mention of this in the recent major trade deal update with China, right?

Jarek
January 15, 2021 12:15 pm

How EU countries like Poland (member since 2004) can be ‘significantly affected by the CBAM’?
Just curious.

Gary Pearse
January 15, 2021 1:15 pm

“Big developing economies like India, Brazil, and China have always argued that the per capita emissions in the U.S. and EU are much higher than their own”

Clever. Their percapita is always going to be higher with larger families. Sheesh, was this Obama’s negotiating prowess? None of these countries should be on the developing list. Stupid used to be entertaining but now it hurts.

MarkW
Reply to  Gary Pearse
January 15, 2021 2:13 pm

There are places with extreme poverty in all of those countries. Nothing in the US comes close.
Why shouldn’t they be called developing countries, they still are.
What does family size have to do with how much fossil fuels are being burned per person?

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