17 october 2020

From Adam Tooze's brilliant article in Foreign Policy magazine [In our op-ed & docs section at] Accepting that the Chinese commitment to reach carbon neutrality by 2060 is sincere, and that a new phase in the global struggle for the future is about to start, Tooze writes the following about about the geopolitical economic policies for a renewed great power push against the climate crisis (note the role of potential EU carbon border taxes):

"...the question is how to incentivize the investment that is needed. Regulations, like bans on the import of internal combustion engine cars, are essential. Equally important would be a uniform global carbon price to set a floor for global trade. That starts with regional carbon pricing schemes but must move beyond those to carbon border taxes. This is crucial not just as a national measure, but also to contain the strategies of multinationals that will otherwise outsource carbon-intensive production to emerging markets.

"The EU brought the threat of carbon taxes into play with China this summer. It may have helped to sway Xi to make his announcement. Based on its market size, the EU is a regulatory superpower. The United States could be too. But increasingly, the most dynamic axis of global trade is not with the West, but between large and rapidly growing emerging markets. China is developing a carbon pricing mechanism. As a giant market for imports from lower-cost emerging markets, China may well want to implement carbon border taxes. If adopted by the EU, United States and China, carbon taxes would exercise a huge pressure on energy choices around the world. Exporting countries that used solar and wind power, rather than coal, oil and gas would be at a huge advantage; money would surely follow."

Adam Tooze, "welcome to the Final Battle for the Climate", FP, October 17, 2020

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