This might 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 sort of carbon tax on imported materials starting with iron and steel, cement, aluminum, fertilizer, and electricity. According to the EU, the point is to promote the use of low-carbon materials and reduce emissions, and to protect low-carbon producers within the region. The EU explains:
The French finance minister calls it “a major step forward in the fight against climate change. We’re making the effort to reduce carbon emissions in industry… We don’t want these efforts to be of no avail because we import products which contain more carbon.”
The process is all very complicated to make it not look protectionist, which it is—protecting 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 electricity and has five times the carbon emissions of Russian hydro-electric powered aluminum. So once the CBAM is in place, Chinese aluminum would cost a lot more than the stuff smelted in Norway with hydropower. Which, of course, doesn’t make producers of the dirty stuff 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 at a media briefing:
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 have offshored their carbon emissions to China which then ships them back to us embodied in the stuff that we buy from them. It’s why we should be counting our carbon where it is consumed, rather than where it is produced. As I wrote in my book “Living the 1.5 Degree Lifestyle”:
With the Carbon Border Adjustment Mechanism, the EU is putting a price on carbon consumption. Users of the dirty imports will pay more for low-carbon materials or pay the tax; alternatively, producers could clean up their acts and deliver products with lower 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 is making it with hydrogen. The Canadian aluminum industry is looking at new processes to make aluminum smelting even greener. Even the cement industry is trying to clean up its act. All of this costs real money. That’s why we need border adjustment mechanisms everywhere and on everything.
