January 9, 2008

European Commission Considers Import Carbon Tariffs

The European Commission is contemplating a carbon tariff on goods from countries where greenhouse gas emission policies do not equal European standards, according to Business Week. The tariff system would force companies that export products to Europe to buy EU emissions permits through the Emissions Trading Scheme.

France strongly supports the tariff. European Trade Commissioner Peter Mandelson said that such a scheme would be hard to implement and could lead to trade disputes.

The European Commission is also considering an expansion of the ETS, according to Reuters. Current trading of carbon credits on the ETS market is worth $37 billion annually, and the commission is considering a proposal that would greatly increase that value by decreasing the percentage of free carbon credits that are distributed to European power generators and manufacturers. 90 percent are currently given out for free whereas 60 percent would be auctioned off annually beginning in 2013.

Only a few months ago, the European Union gave parliamentary approval to a plan that requires airlines flying to and from Europe to offset some of their emissions by buying CO2 allowances on the open market.

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