Kicking us when we’re down
By Pete North - March 11, 2021
It’s been brewing for a while but the European Parliament on Wednesday overwhelmingly endorsed the creation of a carbon border charge that would shield EU companies against cheaper imports from countries with weaker climate policies. The non-binding vote was an early step in a long path to setting up the carbon border levy.
As I understand it, the EU plan to impose carbon border fees on polluting imported goods would initially apply to steel, cement and electricity, but could expand to more sectors later. The Commission plans to roll out the policy by 2023 in a few sectors with relatively low international trade flows, to help simplify what is expected to be a legally and technically complex nightmare.
It is not yet clear how authorities will measure the level of pollution, or carbon intensity, of goods or how variable the fees will be or what other goods will be covered (and who decides). Initially, least developed countries and those with equivalent carbon-pricing policies to Europe could be exempted from the levy, essentially creating a carbon union layer to the EU. The UK will have to create its own policies – possibly just to maintain its existing TCA preferences. “Legal experts”, we are told, have warned of the challenges of designing the policy within World Trade Organization rules.
This, frankly, is the last thing anybody needs. If the plan is to “build back better” then we’re going to need rather a lot of steel and cement, particularly if we’re going to build all the homes we need. Moreover, the way in which the fees are calculated is set to be as intensely political as EFSA risk assessments and subject to major lobbying. It’s yet another layer of trade bureaucracy that strangles growth.
Worse still there are presently no adults in the room pointing out what a terrible idea this is, especially if we’re going to bounce back from a pandemic. One of the more persuasive arguments to leave the EU was the way in which these agendas were imposed without any meaningful opposition, but with EU regional leverage being what it is, and a rudderless Tory party under the sway of Johnson’s court prostitute, we will no doubt develop our own job killing carbon tariff regime.
Though advocates will claim the fees apply only to a limited number of sectors, this is classic EU behaviour – launch a dog’s dinner of a programme, stabilise it, then expand it – much like the Euro, utilising the “beneficial crisis” along the way.
Remainers will probably say that were we still a member of the EU we would be in a position to veto this move, which to a point is true (in this case there is no veto in a non-binding resolution), but as the Johnson administration shows, the Tories always lose their spine in office. They could have vetoed it, but they wouldn’t. In that respect we are no better off for having left the EU, not least by way of being party to all the same global agreements on climate. The problem of an unaccountable and out of touch elite is still the same.
When it comes to climate dogma, Brexit isn’t much of a remedy. It’s embedded in global governance and though you can take the policy wonk out of Brussels, you can’t take the Brussels out of the policy wonk. These lamentably bad ideas are currency within the Wesminster bubble and our MPs, just like MEPs, are salivating to inflict more misery on struggling households.
The result of this in the real world, with high taxes on cement and steel, is to maintain impossibly high house prices and ensure than new builds continue to be cramped unliveable shoeboxes. Meanwhile carbon tariffs on energy imports will cripple our recovery. But so long as politicians can bleat about their “green revolution” and remain insulated from the consequences, they have no reason to care. They’ll keep pouring petrol on the bonfire.