This may be the most boring title ever on Treehugger, but it is actually an interesting and important precedent. The European Union is introducing a Carbon Border Adjustment Mechanism (CBAM), a type of carbon tax on imported materials starting with iron and steel, cement, aluminum, fertilizers and electricity. According to the EU, the aim is to promote the use of carbon-poor materials and to reduce emissions, and to protect the carbon producers in the region. The EU declares:
“Climate change is a global problem that needs global solutions. As we increase our own climate ambition and have less stringent environmental and climate policies in non-EU countries, there is a strong risk of so-called ‘carbon leakage’ – ie 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 importers. “
The French Finance Minister calls it “a big step forward in the fight against climate change. We are making the effort to reduce carbon emissions in industry … We do not want these efforts to be in vain because we are importing products that are more carbon contain. “
The process is all very complicated so that it does not look protectionist what it is – to protect European industries that have reduced their carbon emissions from those in other countries that have not. A good example is aluminum; as noted in an earlier post, Chinese aluminum is made with coal-fired power plants and has five times the carbon emissions of Russian hydroelectric-powered aluminum. So if the CBAM is in place, Chinese aluminum would cost a lot more than the things that are smelted in Norway with hydropower. Which of course makes the producers of the dirty stuff not very happy. When it was first proposed, China called it anti-competitive, with Liu Youbin, a spokesman for the Ministry of Ecology and Environment, saying in a media briefing:
“CBAM is essentially a unilateral measure to extend the issue of climate change in the trade sector. It violates WTO principles … and [will] seriously undermining mutual trust in the global community and the prospects for economic growth. “
Steven Davis and Ken Caldeira / “Consumption-based Accounting of CO2 emissions” (Study)
The Chinese Ministry of Ecology and Environment is not wrong; this will cause grief for the producers of dirty steel, aluminum and electricity. As the graph shows, Europeans and Americans offshored their carbon emissions in China, which they then send back to us, embodied in the things we buy from them. Therefore, we should count our carbon where it is consumed, rather than where it is produced. As I wrote in my book “Living the 1.5 Degree Lifestyle”:
“Production-based accounting (PBA) measures the emissions of everything that happens within the borders of a nation; it is the basis of the Paris Agreement, in which the signatory countries agreed to reduce their own emissions. However, in recent decades, thanks to globalization, there has been significant deindustrialisation in developed countries and a shift in production to developing countries, our carbon emissions have been offshore. That’s why Consumer Accounting (CBA) of carbon makes so much more sense.
When I buy a home air conditioner, who is responsible for the emissions that come from that machine? Should I be able to make the emissions involved in their manufacturing offshore if it is my choice to buy the machine? We blame China for all the pollution from their factories, but they do the things we want and we buy. Therefore, it is better to measure Consumption: it is a more precise measure of what each party, whether individual or nation, is responsible for. ”
With the Carbon Border Adjustment Mechanism, the EU sets a price on carbon consumption. Dirty importers will pay more for carbon materials or pay taxes; alternatively, producers can clean their files and deliver products with less carbon content. In a perfect world, there would be a carbon label on everything, not just raw materials, and there would be a carbon tax on everything, encouraging both consumers and producers to look for the lowest carbon sources.
The Swedish steel industry does it with hydrogen. The Canadian aluminum industry is looking at new processes to make aluminum smelting even greener. The cement industry is also trying to get their hands dirty. All this costs real money. This is why we need border-adaptation mechanisms everywhere and everywhere.
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