With a border levy, the European Union will tax the import of polluting products. This Tuesday morning, negotiators from the European Parliament and the European member states agreed on the terms of the new climate tax. The agreement concludes negotiations on one of the most controversial elements of the European climate plans – in the run-up to a major agreement on all green laws later this week.
The new import levy should ensure that new climate standards do not put European industry at a competitive disadvantage. To prevent this, there will be a tax on the import of polluting products from countries without their own tax on CO emissions.2. Last July, European Commissioner Frans Timmermans (Climate) already presented a proposal for the levy, which has now been developed into a final law by MEPs and representatives of the member states.
At the insistence of the European Parliament, the list of products to which the levy will apply has been expanded slightly. In addition to iron, steel, cement, fertilizer and electricity, hydrogen is also added. Slightly more emissions further down the chain of production of the goods are also taken into account, which is also a wish of the European Parliament. Chief negotiator on behalf of the European Parliament and PvdA MEP Mohammed Chahim speaks in a statement of a “worldwide first”. “With this directive, the polluter will really pay, and we will give the rest of the world a push to do the same.”
With the agreement, not everything is clear about the new levy. The main conditions for the introduction should become clear later this week, during other negotiations. Crucial is the phasing out of the free emission rights that polluting companies in the EU still receive in order to eliminate their competitive disadvantage with the rest of the world. If the border levy is introduced, those free allowances will disappear, but the exact plan for phasing out the tax is still subject to thorny negotiations.
As a result, the date of introduction of the border levy is also still uncertain. Because the EU wants to comply with the rules of the World Trade Organization, the border levy can only apply if the advantageous free emission rights for European companies disappear at the same time. A total agreement on all parts of the new climate laws is expected to be reached next Sunday.
After that, it may also become clear how the rest of the world reacts to the levy. This is controversial among countries such as China and Russia, because they see it as a protectionist measure with which the EU imposes its climate policy. The possibility that other countries will respond with other import duties cannot be ruled out.