It is becoming ever more evident that much of Europe’s heavy industry is unlikely to survive the EU’s unilateral Net Zero policy.
The EU’s carbon price reached a new record high of 45 euros ($54) a tonne on Tuesday.
As the carbon price is expected to increase much further in the next few years, European industrial groups are desperately calling for the introduction of a carbon border tax, hoping that it will save them from international competitors that are able to produce much cheaper.
They warn that rising energy and carbon costs will force energy-intensive manufacturing to shut down and relocate to countries with less stringent CO2 targets if the EU does not introduce protectionist carbon protection.
It is rather doubtful, however, whether the EU can afford to introduce a carbon border tax, knowing full well that China, India and much of the rest of the emerging and developing world would simply retaliate in return, threatening to tax European products out of Asian and African markets altogether.
European and American politicians should be reminded that we have been warning for years about this inevitable outcome of unilateral climate policies.
Benny Peiser: Testimony on unilateral EU climate policy risks to US Senate Committee, December 2014
EU industry calls for urgent carbon border tax as prices soar
Record costs in bloc’s Emissions Trading Scheme are a gift to rivals, say companies
European industrial groups have stepped up calls for the EU to hasten the introduction of a carbon border tax as record prices for carbon dioxide allowances raise the cost of polluting in the bloc far above any other region.
Carbon prices in the EU’s flagship Emissions Trading System, a cornerstone of the bloc’s ambitious new target to slash emissions 55 per cent by 2030, are within touching distance of €50 a tonne — more than double their pre-pandemic level.
While the rally has been welcomed by environmental groups and some companies as a potential boost for the clean-up of European power and manufacturing, it has left some industries wincing.
Tata Steel has already placed a €12-a-tonne carbon surcharge on metal produced in Europe, including the UK. While it says this is necessary to cover its costs, the move risks disadvantaging the region’s production and exports.
Other industries, from cement to petrochemicals, have argued that the rally could starve them of funds to invest in decarbonisation….
ArcelorMittal, one of Europe’s largest steel producers, said that without a global carbon price the EU would need to implement a carbon border tax on imports from beyond the bloc if the industry was to remain competitive.
The company said European producers were “at a competitive disadvantage versus international peers”, warning of “carbon leakage” should manufacturing move overseas to areas with less stringent environmental controls.