Carbon Border Tax

Subject – Environment

Context – ‘Carbon border tax discriminatory’

Concept –

At the COP26 global climate conference currently underway here, four developing countries – Brazil, South Africa, India and China (the BASIC Group) – have jointly opposed the proposed carbon border tax, calling it “discriminatory”.
The carbon border tax is a levy proposed by the European Union to protect its domestic industry from cheaper imports from countries where rules imposing low carbon production are not strict.
- EU fears that while its industry would be at a disadvantage because European companies would have to comply with strict rules, those from other countries may not.
A joint statement issued by BASIC stresses on the importance of the successful completion of negotiations for operationalising Article 6 of the Paris Agreement, which deals with carbon markets.
- Article 6 of the Paris agreement seeks to set rules to strengthen the integrity of carbon markets and create a new global carbon offsetting mechanism.
Developing countries fear that the carbon border tax might turn out to be a protectionist tool in the hands of European countries, leading to “market distortion”.