Carbon Border Tax in Europe Gets Backing From Polish Premier

(Bloomberg) -- The European Union’s plan to impose a carbon tax at its border received backing from Poland, the bloc’s only member which hasn’t fully signed on to its climate neutrality pact.

Europe is considering several options for penalizing imports from polluters as part of its Green Deal, an unprecedented strategy to become the world’s first climate-neutral continent. EU member states are debating the so-called border adjustment mechanism amid warnings that it could trigger retaliation from China and the U.S.

Poland’s Prime Minister Mateusz Morawiecki said on Thursday that the planned levy could be a new source of revenue to help plug a hole in the bloc’s next budget, which will be slimmer following the U.K.’s exit.

“Poland is supporting this type of mechanisms because they help European companies grow,” Morawiecki told reporters after a meeting with European Council President Charles Michel in Brussels. “They help keep the industry in Europe. We don’t want the production of cement or fertilizers to move in a moment to Ukraine, Belarus, or India or China.”

‘Good Consensus’

His comments come two weeks before an extraordinary meeting of EU heads of state to discuss the bloc’s trillion-euro budget for 2021-2027.

New sources of revenue are growing in importance after Brexit left a 10 billion-euro annual hole in the bloc’s financial plan, a cornerstone of EU policy that lets farmers compete against imports from the developing world, helps poorer regions catch up with the richer ones and underpins projects that bind the union together.

“The discussions will certainly be very difficult,” Morawiecki said. “The key will be to find a good consensus over new own resources.”

The range of options the EU commission is considering to implement the carbon border adjustment mechanism varies from a tax to a requirement for importers to buy pollution permits in the bloc’s carbon market. A draft law is due next year.

Europe wants to eliminate its net carbon emissions by mid-century, while at the same time protecting its businesses from foreign competitors who don’t have to bear the costs of pollution.

Coal-dependent Poland endorsed the EU-wide carbon neutrality goal at the last meeting of the bloc’s heads of government in December, but was alone among the bloc’s 27 nations in declaring that it’s not bound by the 2050 deadline because of the effort and expense required.

A border tax could prevent “carbon leakage,” whereby producers move elsewhere to avoid strict regulation, and could encourage other major emitters to faster cut their greenhouse-gas emissions. Imports from countries that abide by comparable environmental standards would be spared the new levy.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.