All eyes are on the goals set by the US and China, which currently produce the largest amount of greenhouse gases, and most importantly, how to get there.
China and India have publicly criticized the idea of a CO2 border tax. Japan is not in the mood. And the United States just said it was considering the idea of its own carbon border tax.
It is still unclear exactly which products the tax is targeting. For example, the United States is particularly concerned about the potential impact on US-made steel, and it remains to be seen whether the marginal tax proposal would take into account the CO2 emission intensity of imported steel.
The United States is in a difficult position with a future European border tax. The Biden government is keen to reestablish transatlantic alliances, including with regard to climate change. Yet several US companies with no prospect of carbon pricing legislation in the United States could be vulnerable.
The Biden government has promised the prospect of its own carbon border tax, although its prospects would likely be bleak in a divided Congress. “It is certainly not off the table in any of the discussions,” said White House climate advisor Gina McCarthy on Tuesday at a conference organized by Bloomberg. “There are many possibilities here to see an adjustment of the CO2 limit as an opportunity.”
Other aspects of the legislative package are likely to be controversial within the European bloc of 27 countries itself. Efforts to phase out sales of new internal combustion engines are likely to encounter objections from some European car manufacturers. (Bloomberg reported this week that France was opposed to a proposed ban on the sale of new gasoline cars in 2035.) Efforts to phase out coal from power generation are likely to face opposition from countries with large coal plants like Poland and Hungary.
The timing of the European bill is crucial to highlight Europe’s position in promoting climate change and to put pressure on other major emitters, including China and the United States.
“This will be the first attempt to say that we don’t just commit to numbers, we have a set of guidelines, very precise guidelines,” said Laurence Tubiana, director of the European Climate Foundation and former chief climate negotiator for France in the United Nations climate talks, it said in a statement sent by email.