Brussels considering climate tax on imports

The European Commission is considering proposing a carbon dioxide tariff on imports from states failing to tackle greenhouse gas emissions, while also considering a toughening-up of the EU’s own emission trading system.

According to a draft commission proposal, firms from heavily polluting countries outside Europe would be obliged to buy EU carbon emission permits as part of the bloc’s Emission Trading Scheme (ETS), Reuters reports.

The commission is reportedly still internally divided on the idea, ahead of a raft of proposals on a post-2012 climate change policy which it is due to table on 23 January.

The carbon tariff on foreign firms would create a level playing field for European companies which are currently already bearing the costs of the ETS – a system under which firms can buy and sell excess CO2 emissions, putting an overall ceiling on emissions levels.

The plan reflects pressure by French president Nicolas Sarkozy who argued in October that Europe should “examine the option of taxing products imported from countries that do not respect the Kyoto Protocol,” referring to the 1997 international agreement on fighting climate change.

Mr Sarkozy urged Brussels to discuss the implications of “unfair competition” by firms outside the EU, which do not have to abide by strict European standards on CO2 emissions.

But the carbon tax idea has met opposition from EU trade commissioner Peter Mandelson who has said it would be hard to implement and could lead to trade disputes, according to Reuters.