A potential new EU carbon tax may serve as a medium to bring the EU, U.S., and China together.
The EU’s Carbon Border Adjustment Mechanism (CBAM) proposal would force EU businesses to pay a carbon tax for goods imported from places with less stringent emissions rules.
Intending to cut carbon and greenhouse gas emissions by 55% by 2030, the EU is further along than most other countries regarding environmental initiatives.
Believe it or not, the U.S. and China are behind the EU. But, with more resources at their disposal and much support for the passage of this new CBAM within the EU, the U.S. and China will likely start taking aggressive measures themselves to get there.
Many nations, such as India, South Africa, and Brazil, feel discriminated against by this new tax. Their counties are not quite at the same level as the EU – though they are working on it.
The Institute for European Environmental Policy feels that this type of competition between countries to achieve solutions that will combat climate change is precisely what the world needs.
Any country that wants a place within the world economy will have to take the steps necessary to advance towards carbon neutrality.
Policies, such as CBAM, are simply providing the push needed to get there.
Environmental initiatives have increased over the past decade alone, with the carbon offsetting industry booming and numerous investment funds in place to further technological advances.
Regardless of concerns, The European Commission – which serves as the executive arm of the EU – seems to be set on pushing forward CBAM.
They feel that enforcing such a strict policy is crucial since it will prevent EU companies from moving overseas to locations with fewer environmental restrictions.
If companies were to move production operations abroad, it would undermine the aggressive policies the EU has put in place, resulting in more carbon emissions.
Once assessed by the 27 member EU states, it could take two years before this proposal is finally implemented and placed into law.
It will be interesting to see what impact this potential new tax will have within the global marketplace. Still, with the EU, U.S., and China working towards carbon neutrality, it’s safe to hope that positive change is in store.
