Researchers and EU Agree on a CO2 Border Tax to Tackle Climate Change


Researchers and EU agree on a CO2 border tax to tackle climate change. The Carbon Border Adjustment Mechanism (CBAM) is designed to not only help the EU achieve its climate goals but also prevent companies from relocating to countries with lenient climate policies.

The European Union (EU) is taking steps to combat climate change by implementing a Carbon Border Adjustment Mechanism (CBAM).

This mechanism is designed to help the EU reach its climate goals while also preventing companies from relocating to countries with more lenient climate policies. However, the exact details of how the CBAM will be implemented and extended are still being discussed.

To better understand the potential impact of the CBAM, a team of researchers led by Timothש Beaufils and Leonie Wenz from the Potsdam Institute for Climate Impact Research collaborated with Michael Jakob from Ecologic Institute and Hauke Ward from Leiden University.

They applied a new flow-based accounting method to detailed trade network data to assess different implementation options.

The team found that the CBAM could have a significant effect on the EU’s trade partners by channeling the EU carbon price to other countries.

By quantifying the impact of various CBAM scenarios, the researchers hope to provide insights that can inform policy decisions related to climate change mitigation efforts.

The EU aims to stop nations from moving their industry to nations with less stringent climate rules, thus it has introduced a new border tax on CO2 (CBAM).

Starting in 2025, a progressive tax on CO2 emissions from goods entering the EU is what the European Union is proposing. Politicians concur that this method should be implemented, but the specifics of how to do so are still up for debate.

The CBAM might be broadened by the EU to include both the direct and indirect carbon impact of all commodities entering the EU. As researchers and EU agree on a CO2 border tax to tackle climate change, the system, according to the experts, may absorb up to 1,558 megatons of CO2.

Source: Potsdam Institute for Climate Impact Research

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