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New EC President Announces Plans For EU Carbon Border Tax

by Ulrika Lomas,, Brussels

25 July 2019

The newly elected President of the European Commission, Ursula von der Leyen, who was formerly Germany's defense minister, has proposed the introduction of a new Carbon Border Tax, which would be included in a new "Green Deal for Europe" she has promised to deliver within her first 100 days in office.

The idea of a Carbon Border Tax was proposed in 2009 by then French President Nicolas Sarkozy. The tax would be levied on exports to the EU market from countries that have not meaningfully responded to climate change issues by reducing their carbon emissions. The EU would argue that the levy is justified on the basis that those goods are effectively subsidized in the exporting state, compared with the conditions for EU firms, which must contribute towards the EU's carbon emissions reductions targets through the EU's Emissions Trading Scheme and member states' individual environmental tax policies.

In her speech to the European Parliament, she said: "Our most pressing challenge is keeping our planet healthy. This is the greatest responsibility and opportunity of our times. I want Europe to become the first climate-neutral continent in the world by 2050. To make this happen, we must take bold steps together. Our current goal of reducing our emissions by 40 percent by 2030 is not enough."

"We must go further. We must strive for more. A two-step approach is needed to reduce CO2 emissions by 2030 by 50, if not 55 percent. The EU will lead international negotiations to increase the level of ambition of other major economies by 2021. Because to achieve real impact, we do not only have to be ambitious at home – we have to do that, yes – but the world has to move together."

"To make this happen, I will put forward a Green Deal for Europe in my first 100 days in office. I will put forward the first ever European Climate Law which will set the 2050 target into law."

"This increase of ambition will need investment on a major scale. Public money will not be enough. I will propose a Sustainable Europe Investment Plan and turn parts of the European Investment Bank into a Climate Bank. This will unlock EUR1 trillion of investment over the next decade."

"It means change. All of us and every sector will have to contribute, from aviation to maritime transport, to the way each and everyone of us travels and lives. Emissions must have a price that changes our behavior. To complement this work, and to ensure our companies can compete on a level-playing field, I will introduce a Carbon Border Tax to avoid carbon leakage."

TAGS: environment | tax | investment | European Commission | law | aviation | environmental tax | Germany | Investment | Europe | Invest | Investment | Tax

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