1 June 2010 – The European Union should charge a "carbon tax" on developing countries which do not make efforts to reduce their carbon dioxide (CO2) emissions, a study released Monday said.
According to the Centre for European Policy Studies (CEPS) "a CO2 border tax or import tax would increase global welfare" by providing an incentive to lower emissions.
The EU has taken the lead in the fight against climate change, by pledging to cut 20 per cent off its emissions by 2020, as compared to 1990 levels, and by introducing the Emission Trading System (ETS), a cap-and-trade scheme which forces firms to buy polluting permits at auction.
The carbon tax would fall on imports from "countries that do not have a cap and trade system or equivalent measures," CEPS underlined. The US would be exempt, as it is expected to introduce its own version of a cap-and-trade system in the near future.
The idea, however, remains controversial. EU’s Climate Action commissioner, Connie Hedegaard, admitted it was a "tool in the toolkit" of climate change policies, but appeared unconvinced about its feasibility.
"How are we going to do it? If you think it through it is extremely complicated."