Border taxes on CO2

If a global emissions trading system is to be implemented, there needs to be a method of deterring free riders – countries that choose not to limit their own emissions. The obvious candidate is a border tax on embodied CO2 emissions. This possibility looks a lot closer with the EU considering trying it out for cement. The issue is unlikely to go away, and will no doubt cause huge ructions in WTO and similar bodies if it goes ahead. (via Dan Drezner).

20 thoughts on “Border taxes on CO2

  1. Maybe the WTO wouldn’t be so perturbed after all. Joseph Stiglitz is quite positive about it (though maybe with his tongue at least part way into his cheek):
    “…Fortunately, we have an international trade framework that can be used to force states that inflict harm on others to behave in a better fashion. Except in certain limited situations (like agriculture), the WTO does not allow subsidies—obviously, if some country subsidizes its firms, the playing field is not level. A subsidy means that a firm does not pay the full costs of production. Not paying the cost of damage to the environment is a subsidy, just as not paying the full costs of workers would be. In most of the developed countries of the world today, firms are paying the cost of pollution to the global environment, in the form of taxes imposed on coal, oil, and gas. But American firms are being subsidized—and massively so.

    “There is a simple remedy: other countries should prohibit the importation of American goods produced using energy intensive technologies, or, at the very least, impose a high tax on them, to offset the subsidy that those goods currently are receiving. Actually, the United States itself has recognized this principle. It prohibited the importation of Thai shrimp that had been caught in “turtle unfriendlyâ€? nets, nets that caused unnecessary deaths of large numbers of these endangered species. Though the manner in which the United States had imposed the restriction was criticized, the WTO sustained the important principle that global environmental concerns trump narrow commercial interests, as well they should. But if one can justify restricting importation of shrimp in order to protect turtles, certainly one can justify restricting importation of goods produced by technologies that unnecessarily pollute our atmosphere, in order to protect the precious global atmosphere upon which we all depend for our very well-being…”

  2. Suppose the Beazer gets up and Australia signs Kyoto. Could we then impose a retaliatory tariff on goods from China? China could retaliate further by banning raw material imports from Australia and so on tit for tat. If the Kyoto compliant countries acted in unison to strengthen their hand it might hold up, eventually forcing non-compliers to join the club. This bandwagon effect is postulated for carbon trading across the US states.

    There would likely be a mixed reaction from the business lobby. Protectionists might support any tariff on any grounds. Free traders would oppose import restrictions while in the same breath lamenting lower agricultural exports without acknowledging the climate change connection .

  3. rog -“With China and India set to bring on hundreds of new coal fired power stations by 2012 it seems doubtful whether any global emissions scheme will be effective.”

    So we just keep staring into the headlights?

  4. In theory you could have a carbon auction system for imports from China and India but it would be an administrative nightmare. A hefty flat tariff of say 20% might be better which could even apply to service imports such as call centre contracts.

    An obvious weapon is not to sell them fossil fuels. In a TV ad someone asks ‘what do you want the planet to do with this plastic bag’. Substitute tonnes of coal for plastic bags then ask the question. If we delay too long on international action things will get much worse long term than they already are.

  5. If we dont sell them fossil fuels they will get it elsewhere, the bulk of known coal deposits are located in the US, Russia, China and India.

  6. Rog: those power stations have been taken into account in the predictions of emissions growth. It’s important not to exaggerate the importance of China and India. The USA, on its own, puts out 38% more CO2 than China and India combined.

    To give you an idea of just how disproportionate Australia’s emissions are, we emit about 40% of what India does.

    Yes, India and China’s greenhouse pollution is a very big challenge. But until the USA and Australia get our respective heads out of our backsides and start dealing with these things, we have absolutely no hope of influencing them on this issue. You can’t impose carbon tariffs unless you’re imposing carbon charging on your own economy.

    As for Hermit’s point, like anything to do with international trade, nothing will happen until the USA and the EU can agree. And those agreements can’t begin to be negotiated until January 2009 rolls around.

  7. rog – “Have a look at the figures Ender.”

    Its not a question of looking at the figures. I asked in a rhetorical way are you proposing that because the situation on emission controls is hopeless we should just continue what we are doing and not change anything possibly leading to disaster?

    If not – whats the plan?????

    Bearing in mind some of these words from the Science Show:

    “Robyn Williams: So what sort of picture are you getting of past climate change and how rapidly it took place?

    Jody Webster: We most recently published a paper that identified quite a rapid change at around 14,700 years ago where the reef essentially drowned very quickly in the space of several hundred years, we think, and this is correlated to a world-wide event of very, very rapid sea-level jump of perhaps 15 to 20 metres in the space of 300 to 500 years. So this is on societal time-scale, so these so-called meltwater pulse events have been related to catastrophic icesheet collapse in the past, and this is obviously a great fear now with global warming, the relative stability or lack of stability of the icesheets.

    Robyn Williams: That’s 20 metres in a couple of hundred years. That is startling.

    Jody Webster: Yes, it’s quite a rate. That’s between 25 to 40 millimetres per year. So if we want to put in the sort of scales that we’re talking about now, very, very rapid. And that killed reefs all over the world. We’ve identified this event in Hawaii, it’s been identified of course from Barbados. We’re hoping to identify this on the material that we just drilled in Tahiti and we may have the same record in the Great Barrier Reef.

    Robyn Williams: And that was only a matter of a few thousand years ago.

    Jody Webster: Fourteen-thousand years ago, yes. One of the key things we now know about this climate transition is that sea-level rise was not smooth and continuous. For many years it was thought to be a nice sine curve, but we’ve now found out that it’s punctuated by at least one, maybe several short, sharp, abrupt climate change events, and this is the real interest, and coral reefs are a key for unlocking that.”

    Let us hope we are not unwittingly triggering another one.

  8. Robert: USA actually only 27% more CO2 than China and India in 2003 (IEA). BTW, the relationship between GDP and CO2 is so close (both as cause and effect) (R2= .74, t= 21) you will really have to come up with something better than carbon taxes to get a shift away from CO2. I see in today’s Fin that Queensland is backing CO2, with expansion of coal export handling facilities at Gladstone, so why not get Beatty to veto this, or better, combine virtue and your view of our best interests, and ban coal exports as already uranium mining? Good luck!

  9. Beattie is due for a Road to Damascus type revelation on CO2. In the election run up he said Australia was a bit player in GW, that it was on track to meet Kyoto targets and technological solutions were imminent. No doubt he is chuffed with rapid developments in the Surat Coal Basin. Then again what goes around comes around, which is literally true if Queenslanders have to drink their own pee. So far Beattie hasn’t noticed the first few blinding lights.

  10. TOS: Beattie gets no praise from me on greenhouse issues. But, to be fair, he’s on a hiding to nothing on the topic, seeing the Queensland boom has been to a large extent based on coal exports.

  11. rog – “If you look at OECD projections and compare it to non OECD projections, Australian emissions would be a dot of India and China.”

    Again why is this an excuse to do nothing. Do we dismantle our police force because we only have 5 murders a year compared to America where there are 2000? (figures made up for illustration).

    The Howard, Bush climate change bloc is doing far more harm than the emissions. A positive a forward looking climate change policy from one of the last hold outs would have a far larger effect on developing countries than just the effect of cutting our emission. We also export a lot of our emissions.

  12. Doesnt make sense Ender, crime is specific and local.

    In spite of what Howard and Bush may think and say China and India are going to contribute enormous amounts of CO2 to the atmosphere and efforts to mitigate emissions in Australia will be irrelevant.

  13. For crying out loud rog, Ender’s point is that once upon a time the world was interested in the example being set by free and advanced countries such as Australia and the USA.

  14. rog – “Doesnt make sense Ender, crime is specific and local.”

    And so are our greenhouse emissions. We control them.

    “In spite of what Howard and Bush may think and say China and India are going to contribute enormous amounts of CO2 to the atmosphere and efforts to mitigate emissions in Australia will be irrelevant.”

    So what you are really looking for is a good excuse to go on doing what you are doing with a clear conscience and blame the problem on someone else. The better approach to this and most other problems is to accept the responsibilty. As Dr Phil says “You can’t change what you don’t acknowledge” Your total denial of any responsibillty and blame shifting is typical of very shallow people – are you shallow rog?

  15. “In spite of what Howard and Bush may think and say China and India are going to contribute enormous amounts of CO2 to the atmosphere and efforts to mitigate emissions in Australia will be irrelevant.”

    If we ever do try to get China and India to think about stopping their CO2 emissions per person from getting as high as ours they’d say something like “OK, what strategies do you use to reduce CO2 emissions?” When we then say “None”, what will their response be?

  16. rog – “Do you accept the projections by the EIA Ender?”

    Here you go again answering a question with a question. I asked if blame shifiting and avoiding responsibility was the mark of a shallow person and you answer with another question. Read Chris O’Niell’s response – it is exactly right.

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