EU sets carbon border tax to boost climate efforts The European Union will tax certain imports based on the amount of carbon dioxide companies emit making them. Experts say the move could lead other major economies to do the same.

How a European law might get companies around the world to cut climate pollution

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The European Union did something recently that could get companies around the world to take more aggressive action on climate change. Other governments, maybe even the one right here in the U.S., could soon follow Europe's lead. Michael Copley joins us from NPR's climate desk to tell us about this wonky but potentially useful tool for cutting emissions that are fueling global warming. Michael, so what is it that they're doing over there in Europe?

MICHAEL COPLEY, BYLINE: They're doing taxes, A. So lawmakers have decided to tax some of the things the EU imports, like steel and aluminum, based on how much carbon dioxide companies emit when they're making them. Companies in the EU are already subject to a carbon price. Lawmakers want to make sure that doesn't put them at a disadvantage compared to manufacturers in other places that can emit carbon for free.

MARTÍNEZ: All right. So can I say it's kind of leveling the playing field?

COPLEY: Yeah. I think that's right. They don't want regulations making it too expensive to do business in the EU. The idea is if you put a carbon tax on imports, you take away the incentive EU companies might have to move to places with looser environmental rules. That's important because if companies start leaving the EU, emissions wouldn't really fall. They'd just shift to other parts of the world, and Europe's economy could suffer.

MARTÍNEZ: All right. So it could protect EU companies and make climate regulations do what they're supposed to do. So how could this encourage maybe companies in other parts of the world to cut emissions?

COPLEY: The idea is the fewer emissions you generate making stuff, the less you'll pay in taxes when you sell to EU customers. So companies might try to clean up their operations to make themselves more attractive. Places like China that burn a lot of coal running their factories could also be persuaded to cut their emissions so their companies aren't boxed out of the EU market.

MARTÍNEZ: From what I'm hearing, then, it sounds like it could be a big deal if - if - it catches on.

COPLEY: Yeah. And I think it is a big if. Authorities in the EU won't start collecting these taxes until about 2026. But this looks like a big first step. You know, border taxes on their own aren't a silver bullet for cutting emissions, but it's going to be hard to achieve our climate targets without some way to encourage cleaner manufacturing. And Emily Benson says that's exactly what this could start to do. She works on trade and technology issues at the Center for Strategic and International Studies.

EMILY BENSON: By rewarding green commodities with a lower import tariff, it's saying, hey, we want your goods. We want to engage in international commerce. We are sending a demand signal to the foreign market to do more of a good thing.

COPLEY: Benson says the question now is how countries like the U.S. will respond.

MARTÍNEZ: So what kinds of conversations are happening here in the U.S.?

COPLEY: A lot of people are talking about how a border tax could protect U.S. manufacturers that create less climate pollution than foreign competitors. So advocates like Ben Beachy at the BlueGreen Alliance are focusing on those potential economic benefits to try to make this attractive to as many people as possible.

BEN BEACHY: Companies may think twice about outsourcing a U.S. factory to a country with weaker standards if they know they're going to have to pay a fee at the border to sell those products back in the United States.

COPLEY: Beachy says that could reverse what's sort of been a race to the bottom, where companies move to wherever it's cheapest to manufacture.

MARTÍNEZ: Anyone in Congress talking about this yet?

COPLEY: We're seeing lawmakers on both sides of the aisle start to draft plans for what this could look like in the U.S. Democrats tend to come at this from the standpoint of trying to deal with climate change. Republicans seem more interested in protecting U.S. companies and also punishing heavier polluters, like China. So we don't quite know what a compromise would look like yet. A concern that I've heard is if a border tax leans too far toward protectionism, it could create more trade tensions and actually hurt efforts to cut emissions. And that's because dealing with a global challenge like climate change seems like it's really going to require collaboration between countries.

MARTÍNEZ: Michael Copley is from NPR's climate desk. Michael, nice to talk to you.

COPLEY: Good to talk to you, A.


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