ADB shares views on forthcoming EU carbon tax

Green Economy Materials 26 February 2024 14:33 (UTC +04:00)
ADB shares views on forthcoming EU carbon tax
Lada Yevgrashina
Lada Yevgrashina
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BAKU, Azerbaijan, February 26. The Asian Development Bank (ADB) argues that the EU's planned adoption of a carbon tax on eurozone imports of steel, cement, and power (which generate substantial carbon dioxide emissions) from 2026 will have only a minor impact on the worldwide process of fighting greenhouse gas emissions, Trend reports.

"The EU's Carbon Adjustment Mechanism (CBAM), which takes effect in 2026, levies import duties on steel, cement, energy, and other products that emit carbon dioxide. The EU step is connected to reducing carbon leakage from nations with less stringent restrictions on greenhouse gas emissions to countries with strict regulations and high taxes on carbon dioxide emissions," the published research of the ADB says.

However, the bank's experts estimate that the measures outlined by the EU will reduce global carbon dioxide emissions by less than 0.2 percent compared to the carbon dioxide emissions trading scheme already in place (from €100 to $108 per ton).
"According to the Asian Economic Integration Report (AEIR), the introduction of a carbon tax could reduce global exports to the EU by about 0.4 percent and exports directly from Asia to the EU by about 1.1 percent. The output of some producers in the EU could also be negatively affected," ADB notes.

''Thus, the fragmented nature of carbon tax initiatives, in terms of sectors and regions covered, can only partially curb carbon dioxide emissions,'' the research says.

ADB chief economist Albert Park believes that to significantly reduce carbon emissions globally while also making sure climate efforts are more effective and sustainable, carbon pricing initiatives need to be extended to other regions outside the EU, especially Asia.

Meanwhile, there should be appropriate incentive mechanisms to encourage the widespread implementation of duties (tariffs) on carbon dioxide emissions outside the EU.

"Carbon dioxide emissions along the entire production and supply chain are growing faster in Asia than in other parts of the world. So, trade in environmentally friendly products and services should be encouraged; green technology transfer should be promoted; and governments should be supported in promoting green infrastructure and investment. There should be global cooperation to develop universally recognized systems to account for greenhouse gas emissions from a range of products and services," the ADB document noted.

To note, the ADB has been operating since 1966 and includes 68 countries.

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