Why the EU’s Carbon Border Tax will Fail to Stop Carbon Leakage

Guest essay by Eric Worrall

The EU is once again attempting to impose a carbon tax on all imports, to stop “carbon leakage”, the loss of manufacturing or other businesses relocating to lower cost countries. But a few simple economic calculations demonstrate why the EU’s plan will not stop the ongoing haemorrhage of business activity.

Carbon Border Adjustment Mechanism: Questions and Answers

Why is the Commission proposing a Carbon Border Adjustment Mechanism?

The EU is at the forefront of international efforts to fight climate change. The European Green Deal sets out a clear path towards realising the EU’s ambitious target of a 55% reduction in carbon emissions compared to 1990 levels by 2030, and to become a climate-neutral continent by 2050.

The July 2021 package in support of the EU’s climate targets is an integral part of our strategy to achieve this, and will further seal the EU’s reputation as a global climate leader. As part of these efforts, the Carbon Border Adjustment Mechanism (CBAM) is a climate measure that should prevent the risk of carbon leakage and support the EU’s increased ambition on climate mitigation, while ensuring WTO compatibility.

Climate change is a global problem that needs global solutions. As we raise our own climate ambition and less stringent environmental and climate policies prevail in non-EU countries, there is a strong risk of so-called ‘carbon leakage’ – i.e. companies based in the EU could move carbon-intensive production abroad to take advantage of lax standards, or EU products could be replaced by more carbon-intensive imports. Such carbon leakage can shift emissions outside of Europe and therefore seriously undermine EU and global climate efforts. The CBAM will equalise the price of carbon between domestic products and imports and ensure that the EU’s climate objectives are not undermined by production relocating to countries with less ambitious policies.

Read more: https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_3661

Why does this tax put an EU producer at a disadvantage?

EU Border Tax – No Sale

Simple – selling to another EU entity is price competitive, so far, but selling outside the EU is impossibly expensive, because you are competing with other sellers who don’t pay EU carbon taxes. An exporter outside the EU has an advantage over a manufacturer inside the EU, even if they have to pay a carbon border adjustment.

What about if the EU tries to level the playing field for EU based exporters, and applies a tax credit to exports? This opens the door to massive global carbon carousel fraud.

EU Carbon Tax Carousel Fraud
EU Carbon Tax Carousel Fraud

Either the EU destroys their own exporters, in an attempt to protect their domestic industry, or they have a big firefight on their hands, trying to contain carbon carousel fraud, which will only get worse any time they try to ratchet up their carbon price.

What about the effect of carbon pricing on businesses inside the EU carbon tax zone?

Classic supply and demand graph
Classic supply and demand graph, showing the impact on quantity of a tax driven rise in price per unit. In this case quantity is assumed to be a proxy for economic activity.

Ever visited a shopping centre, and wondered why all the interesting shops are slowly replaced by clothes shops or other high turnover businesses? The reason is all those interesting shops are not profitable enough to pay the rent, and over time they are replaced by simpler, less interesting businesses – safe, boring, profitable, but still a contraction in the diversity of life choices available to consumers.

Pretty much the same thing would happen to domestic high carbon businesses afflicted by EU carbon pricing.

The EU at least in principle likely hopes that revenue from the carbon tax will drop to zero, as people discover low carbon or zero carbon alternatives to the high carbon goods they currently use such as alumina, or simply learn to live without.

But this is a huge gamble. The only reason for carbon leakage in the first place is because the carbon intensive goods targeted by the EU are difficult to replace with low carbon alternatives, and difficult to live without.

If a carbon intensive good is irreplaceable, continued dependency on that high carbon good will be an ongoing anchor dragging on the European economy.

Of course you could make an argument that the benefits the people of the EU receive from reduced CO2 emissions outweigh the costs, that one day our descendants will thank us for giving them the opportunity to experience cold weather. But this does not help consumers and businesses today.

In conclusion, the EU carbon border adjustment will do nothing to prevent carbon leakage. The EU does not control enough of the global economy to make it more than an inconvenience for multinationals. The only people the EU border carbon adjustment will hurt are people living in the EU, who will see their choices and opportunities contract.

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markl
July 20, 2021 10:04 am

Too complicated. Simple: Impoverish successful Western countries to supposedly spread the money around but in reality just make everyone equally poor when the money runs out to finance wealth redistribution.

Anon
Reply to  markl
July 20, 2021 11:38 am

I guess it could be summarized as follows:

1] Europeans will pay higher energy costs.

2] Europeans will pay higher goods costs due to the tariff.

3] Europeans will pay for the privilege of exporting their non-competitive products through government subsidies.

4] Without guaranteed subsidies European firms will be confined to European markets.

5] And then add on all of the foreseen & unforeseen knock-on effects.

All of which, will over a decade or two, relegate the EU to an uncompetitive economic backwater, similar to what happened in the United States, as it gradually off-shored it jobs and factories over the last 20+ years. (sigh)

Last edited 2 months ago by Anon
Felix
Reply to  Anon
July 20, 2021 5:21 pm

The two have nothing in common. The myth that “off-shoring” destroys jobs is belied by the low unemployment before COVID that Obama tried to slow down, and that Trump took credit for, but was really just a typical comparative advantage scenario.

The concomitant myth of the trade deficit is easily disposed of once you realize that dollars out have to equal dollars in unless someone is literally burning them. The reported deficit is accounting cookbookery, using asymmetric figures to fool the willing and provide damned lies for politicians.

Kevin
Reply to  Felix
July 20, 2021 5:57 pm

The libertarians say trade deficits don’t matter and point out that each of us has a trade deficit with with our grocery store. But don’t we have a trade surplus with our employer to sustain our trade deficit with the grocery store? How can you sustain an overall net trade deficit without chicanery?

John Klug
Reply to  Kevin
July 20, 2021 10:04 pm

Milton Friedman used to say they trade goods for our paper (debt). That is a good deal. Especially since our currency is not backed by anything, and neither is the debt.

Kevin
Reply to  John Klug
July 21, 2021 11:12 am

So why would they do that?

Felix
Reply to  Kevin
July 20, 2021 10:23 pm

Both those are correct. But most people have just one employer with one huge imbalance, and lots and lots of small imbalances in the other direction.

Dollars out have to equal dollars in. There is nothing mysterious except in the minds of those who ignore that.

Kevin
Reply to  Felix
July 21, 2021 11:11 am

The dollars that come in go largely to government debt which funds the big government the free-traders are supposedly opposed to. A lot also goes into real estate.

Anon
Reply to  Felix
July 22, 2021 11:39 am

Thanks for the correction. A good example of not believing your eyes and trusting the government statistics, when one travels through such cities as Detroit, Cleveland and others that dot the mythical “Rust Belt”… verses areas such as Guangzhou, Shenzhen, Shanghai.

Hopefully, this argument is brought up in relation to EU Carbon Border Tax, which seems to be backed fear-mongers by who don’t understand the mythical nature of “off-shoring”. 

And hopefully, Germany, Japan, South Korea, Taiwan, China and other counties that regularly run trade surpluses as a matter of policy will wise up and join those (like Namibia, Sudan and Ethiopia) who are aware of the “cookbookery” and run large deficits.

However, thankfully, one can always bury one’s head in the tomes of official economic statistics and the latest economic theories (MMT) as one travels through cities like Detroit, Islamabad and Istanbul to avoid any cognitive dissonance that might arise.

Meanwhile, we can all wait in suspense for the forthcoming US corporate media article, that will posit in five paragraphs (citing anonymous sources) how the new route to economic prosperity is to be obtained through de-industrialization and large trade deficits… and assure us that the projections are as solid as the disappearance of Arctic Ice Cap in the near (or past) future.

Last edited 2 months ago by Anon
Kevin
Reply to  Anon
July 20, 2021 5:53 pm

Didn’t the off-shoring take place during a period when trade barriers and tariffs were reduced?

Gerald the Mole
Reply to  Anon
July 21, 2021 3:58 am

A little too broad. Let’s rephrase it: wealthy Europeans will not notice any change to their living expenses. As usual the workers will be screwed and the poor white boy will be the one who suffers most.l

Tom Halla
July 20, 2021 10:08 am

Carbon taxes are just another regressive tax in the literal sense of regressive, that is, charging the poor at a higher rate. Any scheme to kick back part of the tax is negated by the inherent inefficiency of government.

DMacKenzie
Reply to  Tom Halla
July 20, 2021 7:52 pm

Governments worldwide want to be in charge of a larger percentage of the economy for more control, more revenue, more spending, and more influence. A feature seldom mentioned is that if businesses don’t cut emissions, they simply will pay penalties for the made-up-by-government carbon quotas. This feature has got to be Revenue Department dream…setting penalties using nebulous legislation is their specialty.

Carbon taxes, credits, border adjustment mechanisms, are just parts of the “bigger percentage” strategy that is using CO2 emissions as the parade leader. “Sin” taxes are always collected and spent by government, but get full support from people who “care”, while the money goes into general revenue.….don’t expect emissions or carbon taxes to go away any faster than liquor taxes. It’s really just another revenue source from an invented “industry”, and will be about as successful as prohibition was with alcohol….which seems to be zero alcoholism prevention with much product taxation……

dk_
July 20, 2021 10:15 am

The EU at least in principle likely hopes that revenue from the carbon tax will drop to zero, as people discover low carbon or zero carbon alternatives to the high carbon goods they currently use

The EU government hopes only to increase the size and inertia of the permanent bureaucracy while giving the impression of a transfer of wealth. They will say that this is a luxury tax, and indeed will seem to make some of the wealthy less so, but there will be more property taken from the non-government middle class, more carbon released ‘off the books’ as indulgences for fake green technology, an ever growing ruling class to administer the matching increase in regulation and planning, and a much reduced standard of living for the rest.

Last edited 2 months ago by dk_
Retired_Engineer_Jim
Reply to  dk_
July 20, 2021 12:08 pm

And the tax will never go away. It will just get larger per unit of “carbon” as the imports of “carbon”-including goods go down.

Rhs
July 20, 2021 11:28 am

The more complicated the system, the easier it is to break or falsify the results.

Rusty
Reply to  Rhs
July 21, 2021 2:23 am

And defraud.

July 20, 2021 11:33 am

The US Democrats are working on a $3.5 trillion budget bill that includes “carbon border adjustment tariffs” so the EU is not alone in this lunacy. This will be the so-called budget reconciliation bill that the Republicans cannot stop because it cannot be filibustered.

Economic chaos looms!

commieBob
July 20, 2021 11:39 am

In a competitive situation your response should be driven by a deep understanding of what’s actually going on. Otherwise, you are likely to do things that are counterproductive. The problem often is that you often lose sight of what made you successful in the first place.

So, in that light, what did in the German camera industry? link

Given the ubiquity of really great cell phone cameras, why is there a camera industry at all?

Why is there a Swiss watch industry? The time on your cell phone is way more accurate than you practically need.

So given the unpredictable nature of markets, can we say that the reason European manufacturing has problems is just due to competition from countries that have poor environmental and labor laws? It may be true in some cases but if you think across the board trade barriers are the answer, you may help one or two industries at the expense of most of the others.

Right-Handed Shark
July 20, 2021 11:41 am

WTF is “a climate-neutral continent”???

Last edited 2 months ago by Right-Handed Shark
Reply to  Right-Handed Shark
July 20, 2021 12:05 pm

Antarctica… 😉

whiten
Reply to  David Middleton
July 20, 2021 1:01 pm

Last time I checked the “climate-neutral continent”,
it was called ‘Incontinentia”.

Don’t think it is Antarctica.

🧐

cheers

Last edited 2 months ago by whiten
Retired_Engineer_Jim
Reply to  Right-Handed Shark
July 20, 2021 12:11 pm

Especially as parts of the continent aren’t in the EU.

robin townsend
Reply to  Retired_Engineer_Jim
July 21, 2021 1:32 am

we need to stop calling it ‘the’ eu. its not. its ‘an’ eu. there are plenty of others. anything that operates or exists in more than one european coutnry is an eu.

Gerry, England
Reply to  robin townsend
July 21, 2021 3:04 am

Rubbish. The European Union is an established legal entity and should be referred to as such because there is nothing else like it. The other European entities such as efta, EEA and UNECE are not unions of any sort but agreements.

griff
July 20, 2021 11:59 am

The EU has a larger population than the USA and less social problems, a more developed infrastructure, 3 of the world’s largest economies and generally now is more prosperous than the USA.

About time you looked over your own garden, USA

Reply to  griff
July 20, 2021 12:18 pm

The United States and European Union are the two largest economies globally in nominal terms. As of 2021, both together share 42.4% and 30.7% of the entire global GDP in nominal and PPP terms, respectively.

As per projections by IMF for 2021, United States is leading by $5,548 bn or 1.32 times on an exchange rate basis. On purchasing power parity basis, the margin is less with the United States ahead by Int. $ 1,757 or 1.08 times. According to estimates by World Bank from 1966 to 2019, the US has higher gdp for 41 years, and European Union has higher gdp for 12 years. 2011 was the latest year when European Union had higher gdp than the United States. The ratio between these two was highest 1.62x in 1985 in favor of the US. With 1.16x of the US’s gdp in 1980, the ratio was highest in favor of the EU. In ppp terms, the EU had been closely following the US since 1994.

As of 2021, The per capita income of the United States is 1.86 and 1.44 times higher than that of the European Union in nominal and PPP terms, respectively. The US had greater gdp per capita than the EU for data available since 1966.

https://statisticstimes.com/economy/united-states-vs-eu-economy.php

2019 per capita GDP: US States vs Other Places

2019 per capita GDP: US States vs Other Places

1  Luxembourg 113,196
2  New York (U.S.) 90,043
3  Massachusetts (U.S.) 86,942
4   Switzerland 83,716
5  Connecticut (U.S.) 81,055
6  California (U.S.) 80,563
7  Washington (U.S.) 80,170
8  Delaware (U.S.) 78,468
9  Norway 77,975
10  Ireland 77,771
11  Alaska (U.S.) 76,220
12  North Dakota (U.S.) 75,321
13  New Jersey (U.S.) 73,451
14  Maryland (U.S.) 71,838
15  Illinois (U.S.) 71,727
16  Qatar 69,687
17  Hawaii (U.S.) 69,593
18  Colorado (U.S.) 68,828
19  Wyoming (U.S.) 68,757
20  Minnesota (U.S.) 68,427
21  Iceland 67,037
22  Nebraska (U.S.) 66,737
23  Texas (U.S.) 66,149
24  New Hampshire (U.S.) 66,069
25  Virginia (U.S.) 65,824
26  Pennsylvania (U.S.) 64,412
27  Singapore 63,987
28  Iowa (U.S.) 62,493
29  South Dakota (U.S.) 61,104
30  Rhode Island (U.S.) 60,830
31  Oregon (U.S.) 60,558
32  Ohio (U.S.) 60,464
33  Wisconsin (U.S.) 60,425
34  Kansas (U.S.) 60,310
35  Utah (U.S.) 59,892
36  Denmark 59,795
37  Georgia (U.S. state) (U.S.) 58,896
38  Nevada (U.S.) 58,570
39  Louisiana (U.S.) 57,445
40  North Carolina (U.S.) 56,862
41  Indiana (U.S.) 56,702
42  Vermont (U.S.) 56,525
43  Tennessee (U.S.) 56,451
44  Michigan (U.S.) 54,928
45  Missouri (U.S.) 54,879
46  Australia 53,825
47  Oklahoma (U.S.) 52,409
48  Netherlands 52,367
49  Florida (U.S.) 51,745
50  Sweden 51,241

https://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_sovereign_states_by_GDP_per_capita

Wait! Where are the UK, France and Germany? Right between Alabama and Mississippi!

59  Alabama (U.S.) 47,735
60  San Marino 47,279
61  Germany 46,563
62  Canada 46,212
63  Idaho (U.S.) 46,043
64  Belgium 45,175
65  Arkansas (U.S.) 44,808
66  West Virginia (U.S.) 43,806
67  Israel 42,823
68  France 41,760
69  United Kingdom 41,030
70  Japan 40,846
71  New Zealand 40,634
72  
Rud Istvan
Reply to  David Middleton
July 20, 2021 1:13 pm

Griff never lets facts get in the way of his opinions.

Richard Brimage
Reply to  David Middleton
July 20, 2021 1:44 pm

And it is even worse than the GDP per capita figures indicated since the cost of living is so much higher in Europe than the USA. Griff’s ignorance is amazing.

Chris Hanley
Reply to  David Middleton
July 20, 2021 2:48 pm

Trading Economics gives the GDP Per Cap PPP for US 60235.73 US dollars in 2020, GDP Per Cap PPP for EU 43681.04 US dollars in 2020.

Chris Hanley
Reply to  David Middleton
July 20, 2021 3:11 pm

Of course the GDP figures give no indication of genuine productivity, for instance Luxembourg produces nothing except regulations that are a net negative for the EU economy as a whole.

pigs_in_space
Reply to  Chris Hanley
July 20, 2021 4:51 pm

Actually Luxembourg offshores TAX exiles and con jobs like Paypal, Amazon with the accountancy and banking that goes with them.
Net added value destruction of anyone who tries to compete with them on an “even playing field” locally.

Reply to  David Middleton
July 21, 2021 10:22 pm

Very interesting statistics, David. It shows that the US has indeed a strong economy. However, it does not invalidate Griff’s main point, US has far more social problems than EU.

The problem, as I see it, is the extremely high economic inequalities in the US. Some hard working people are living from pacheck to paycheck, others are billionares with multiple luxury homes.

There was a time when most of us Europeans admired the US for their high living standard and good products. Several of my parents relatives moved to the US because the salaries were higher. Back in the 1950-ies an unskilled laborer could make twice as much in the US as in most of Europe, now it is the other way around.

Even unskilled laborers in Europe have reasonable salaries, they have the same public health service as rich people, and they have a yearly 5 weeks paid vacation.

I am not saying this to start a «we are better than you» quarrel. That is just childish.

I honestly love the US. You still have so many good qualities we do not find in much of in Europe, but something has gone wrong for the ordinary working class in the US.

/Jan

Reply to  griff
July 20, 2021 12:20 pm

Indeed, the Democrats are about to do something equally stupid!
https://www.nytimes.com/2021/07/19/climate/democrats-border-carbon-tax.html

When it comes to climate stupidity the race between the EU and the Democrats is neck and neck.

Rud Istvan
Reply to  David Wojick
July 20, 2021 1:15 pm

About to try, not necessarily succeed. And they are incentivizing a massive turn about in the 2022 elections.

Reply to  Rud Istvan
July 20, 2021 2:39 pm

Yes the recon bill will be very interesting. Sanders wanted $6 trillion and they are down to $3.5 trillion. These bills were supposed to keep the Gov’t afloat, not float it. Where all this money will come from remains to be seen but that is a recon requirement, that all is paid for. Plus they only get one a year.

Curiouser and such.

Dave Fair
Reply to  David Wojick
July 20, 2021 8:03 pm

Out of a an approximate $4 trillion Federal budget, itself in huge deficit, where does one get an extra $3.5 trillion that is ‘paid for?’ Since Congress writes the rules, anything is possible I suppose. I fear for the Republic in the face of such unopposed lies and profligacy.

Last edited 2 months ago by Dave Fair
whiten
Reply to  griff
July 20, 2021 12:30 pm

griff,
your own country left EU, abandoned it.

For the same reason EU is doing now carbon tax.

To protect and secure the main capital, the workforce… and it’s value.

Nothing much to really do with climate… at this point,
unless considering the craze of climate policies over decades as the main platform and means of ripoff, which facilitated the very crisis faced now,
which is subjecting the entire workforce value to disaster, for not saying collapse,
like it happened in the red comi countries.

cheers

Rich Davis
Reply to  whiten
July 20, 2021 4:17 pm

hi whiten,
Will you give me a hint in my game with you? Are you inside or outside the EU?

whiten
Reply to  Rich Davis
July 20, 2021 4:49 pm

Mediterranean… as proper European as one could be… 🙂

But why must you persist in my precise origin?

cheers

Rich Davis
Reply to  whiten
July 21, 2021 4:32 am

Any mystery requires inquiry, whiten. Language is a hobby for me and I could not guess from the unusual form of some of your English phrases what native language was influencing them.

It’s my belief that language is the main forge of culture that binds us in our mindset in a way that we are mostly unaware, as the fish is not aware of the wetness of water. To know your native language is to know many things about you that are likely to be true. (Not to say certain of course, since we all have our individual identity).

Those who never learn another language are less likely to notice how their native language influences their thinking and beliefs and less likely to question or fully grasp the common assumptions of their own culture.

I suspect that you have many insights along those lines.

cheers

whiten
Reply to  Rich Davis
July 21, 2021 9:35 am

Yes, ofcourse you are right.
Language(s) and culture(s) are very much coupled in their evolution.

Yes, I will not argue your belief. 🙂
It is rational and reasonable, as far as I can tell.

I know my English is not rich or polished.
And I have almost no editing skills.

Plato’s cave, is a fascinating ‘story’.
It is a story of education and exploration of knowledge.

A proper expected response, from you, may oblige me to tell you where I am from.
🤔

Rich Davis
Reply to  whiten
July 21, 2021 3:46 pm

The shadows on the wall are like seeing through a glass darkly. Also like the parable of the elephant and the blind men.

Πολύ καλά, υποθέτω! Το όνομά σας είναι Ασπρίζω?

whiten
Reply to  Rich Davis
July 21, 2021 7:34 pm

Wow, an interesting handshake.
What about it! Dang.

cheers

Rich Davis
Reply to  whiten
July 22, 2021 3:06 am

I think that means that my guess was correct? Or that my Greek stolen from.Google is a joke!

If my guess was right, what gave it away was Plato and an earlier discussion about Aesop’s fable that we inaccurately call the Ant and the Grasshopper where you correctly referred to the lazy one as a Cicada, combined with your clues of being in Europe, Mediterranean, and as properly European as you can get. I was slow to catch on, thinking you were Russian.

If I may say Whiten, it is far more impressive to me that you write deep thoughts imperfectly but without hesitation, like shadows on the cave wall, than the words of many of us that may sometimes be grammatically perfect. I never intended to offend when referring to it.

cheers!

whiten
Reply to  Rich Davis
July 22, 2021 11:10 am

Fair enough.🙂
Yes it was correct… the guess.

Both counts, valid, including the rhetorical part too… of your query.

But, but, but;
a giveaway it is a giveaway. 🤓

Wondering which one of us got the ‘genuine’ giveaway! 🤔

cheers

whiten
Reply to  Eric Worrall
July 20, 2021 2:29 pm

Far from it Eric.

Europe is the place, the very birthplace of insanity of communism and fascism.

It is what it is.

In the ‘long’ time past Europe had the very best response to such a high insanity or ‘evil’.

In European terms, then, “bounties” going up for the ugly or whatever in those disgusting criminal unacceptable terms, did not ever include ‘live’ as an option ever.

Either it was ‘dead” or “very dead”.

The very history of EU then.

I am sure this very much confuses modern day weak or otherwise known as the safe places ‘man’…
but it is or was part of human history there and then ,
which better not be ignored or forgotten.

Yeah, I know, is a bit too much, isn’t it!

cheers

Herbert
Reply to  Eric Worrall
July 20, 2021 7:36 pm

Eric,
Mention of “big towns in Wales on a bad night”and “Bristol,just over the border in England” reminded me of the wonderful post-war radio skit by Frank Muir and Denis Norden,in 1949, “Balham, Gateway to the South”.
It was a comedy sketch parodying a travel documentary eulogising the South London suburb of Balham.
It compared the area stuck in terrible post-war austerity to those exotic faraway locations depicted in cloying travelogues of the day.
As I recall, the voices in the skit included Peter Sellers (who reprised it with the Goons in 1958),plus a young Benny Hill and Michael Bentine.
According to a Census,there are some 570 slums in towns and cities in France so griff might appreciate the ability of the British to laugh in adversity all those years ago.
All is not coming up roses in the EU.

commieBob
Reply to  griff
July 20, 2021 3:20 pm

I was going to agree with Griff in one respect, general prosperity.

GDP measures the amount of income in the country, not the amount of money in the citizens’ pockets. The charts David presents make it look like Ireland is a very prosperous place and yet my experience with the Irish people doesn’t make me think they are particularly prosperous.

A better measure of general prosperity is median income. Half the population makes more than the median income and half makes less. Ireland doesn’t fare so well in terms of median income. There are clearly some huge piles of money in Ireland but they aren’t reflected in the general prosperity of the people.

So how does Europe stack up when you consider median income? Except for a couple of Scandinavian countries they’re all behind good ‘ole America.

Sorry Griff. No matter how I try, I still can’t find a way for you to be right.

Marc
Reply to  griff
July 20, 2021 8:51 pm

Griff- Have you ever actually traveled to America ? Your statement about the EU generally being more prosperous than the US is laughable. I have been to 2/3 of the European countries and I am generally appalled at what I see. The houses are generally small and old. The food is ridiculously expensive (Portugal being a notable exception) and the cars people drive mostly look like small rat traps. The first thing people do when they move from the UK to Houston Tx (my home) is to buy a giant SUV and park it in the oversized garage at their enormous home and brag to me that their garage is bigger than their parents entire flat back in London. You should really get out more.

Thomas Gasloli
July 20, 2021 12:08 pm

Taxing imports & subsidizing exports will likely violate WTO, even if you claim it to be “carbon tax” and “carbon equalization”.

Retired_Engineer_Jim
July 20, 2021 12:10 pm

Eric,

Please stop playing by their rules. They are talking about carbon dioxide, not carbon.

lmo
July 20, 2021 1:08 pm

At a quick glance, it seems most of the EU’s imports come from China.
So the conversation goes something like this?
EU: You don’t have a carbon tax, we have to tax your exports
China: Why would we have a carbon tax, we are meeting our Paris commitments
EU: Ummm

Bruce Cobb
July 20, 2021 1:48 pm

I hear Depends helps a lot with “carbon leakage”.

Rusty
July 21, 2021 2:22 am

The EU is becoming ever more irrelevant in terms of global trade and world GDP – in 40 years it’s dropped 50% as the RotW developed.

The EU’s population is 450 million which is dwarfed by India and China alone. The EU is going to become a backwater as other markets develop.

AGW is Not Science
Reply to  Rusty
July 21, 2021 6:17 am

The other elephant in the room being ignored. If the EU succeeds in its Climate Fascism, its productive population will likely start heading for countries where their productiveness will be rewarded rather than punished – leaving the EU with only those looking for the EU’s generous handouts. “Venezuela with history” here the EU comes…

Captain climate
July 21, 2021 8:20 am

The real aim of the EU here is to get tax revenue for Brussels that only they can control. They don’t have the constitutional powers to do this, but no one seems to be stopping them. Be prepared for more EU exits.

TomR
July 22, 2021 1:59 pm

A response of other countries to carbon border tax doesn’t have to be limited to physical goods. Why would anyone recognize the intellectual property of EU corporations if EU increases carbon taxes? Lots of countries have less intellectual property than EU, so not recognizing patents or trademarks from EU as a revenge for a carbon tax would be a good thing for their economy.

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