With steel prices falling, multinational steel firms are fighting to stay alive. But the industry is a heavy user of carbon and is responsible for 5% of global emissions, which is putting even more pressure on those domiciled in countries with tough carbon rules. What to do?
A story in the Economist says that some in the sector want a carbon tariff to level the international playing field. What now?
“The reforms the European Parliament passed this week are an attempt to increase the price of carbon by cutting the emissions allowances granted to firms,” says the column. “The measures include the EU’s first border tax on carbon, levied on cement imports. Steel firms, also heavy users of carbon, say their exclusion from this scheme is unfair.”
Why not include steel? Well Lakshmi Mittal, the CEO of ArcelorMittal, the world’s biggest steelmaker, has come out in favor of the tax, the Economist reports.
And the oil industry is also on board, in theory: BP, ExxonMobil, Royal Dutch Shell and StatOil, to name a few. Those companies don’t generally advocate for taxes or restrictions but they think that such measures would be more efficient than a patchwork of international laws. Moreover, they have major investments in natural gas, which is expected to continue to be the fastest growing fuel in the United States.
“In BP, we continue to believe that carbon pricing has an important part to play as it provides incentives for everyone — producers and consumers alike — to play their part,” Dudley said at a news conference in London last week, as reported by USA Today.
Furthermore, the Climate Leadership Council comprised of a older and established Republicans have released a plan to begin taxing carbon at $40 per ton. “The Conservative Case for Carbon Dividends” lays out a scenario where that price would rise each year and where carbon emissions would fall.
The group, which includes former Secretary of State James Baker, former Secretary of State George Shultz and former secretary of the Treasury Henry Paulson, says that $194 billion in revenues would be generated in year one — a figure that it expects to increase to $250 billion a decade later. That money would then be returned to the American people in the form of a “dividend,” although separate versions of the idea have suggested it go toward funding newer technologies to reduce emissions.
“If you look at the priorities of President Trump, our plan ticks every one of his boxes,” said Ted Halstead, founder and president of the council, in a press conference in Washington, D.C., in a story by Scientific American. “It is pro-growth. It is pro-jobs. It is pro-competitiveness. It would balance trade. And last but hardly least, it would be good for working-class Americans.”
Okay, so how do the EU reforms compare or differ? According to the Economist, steelmakers in Europe would pay up to $32 to emit a ton of carbon while foreign producers selling their product to the EU would get a free ride, which puts domestic producers at a disadvantage. EU steelmakers simply want their governments to tax all producers equally.
Imposing any tax is difficult. Getting all governments everywhere around the world to impose the same tax at the same rate is even harder. But if countries want to get their arms wrapped around the climate issue and carbon releases, doing so is worth a look — and it might raise revenues for them, which they could channel into the development of alternative technologies.