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Green Deal Crisis: EU’s Carbon Border Levy Faces Long Delay As Germany Fears U.S. Retaliation

Financial Times

Brussels’ plan for a carbon border levy on imports risks getting snarled up in political resistance and compliance that could radically reduce the scope of the measure and delay it for years, officials have warned. 

As part of the EU’s push to become climate neutral by 2050, the European Commission has promised a “carbon border mechanism” that would impose sanctions on foreign C02 imports to protect European industries from being undercut by overseas polluters. The idea is among the most radical elements of commission president Ursula von der Leyen’s “Green Deal” and has already raised concern from the US and China about European “protectionism”. 

Officials have vowed to put forward a proposal by next year. Frans Timmermans, commissioner in charge of the Green Deal, last week said the scheme was designed to prevent “carbon leakage” — where activities and industry could decamp from the EU to countries with less onerous environmental standards. “We will protect European industry if it takes a historic step to decarbonise,” he said. 

But behind the promises, diplomats and officials have warned the mechanism is a uniquely complicated and unprecedented exercise that has already provoked resistance from powerful member states including Germany. Berlin has voiced fears that a carbon tax would intensify tit-for-tat trade retaliation from the US targeting its car industry.

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