Rethinking our carbon emissions

Pilita Clark writes in the Financial Times that countries may have to start taxing imported goods if those countries are to serious come to grips with their “true” GHG emissions.  While this is not a new thought, it is important that it is discuss again.  It will be important to see how much attention it gets.  While this is about the UK, it should be considered in most developed countries.

Climate watchdog eyes tax reform

Countries such as the UK that have relatively tough rules on cutting carbon dioxide emissions might have to start taxing imported goods from countries with weaker environmental laws, the government’s official climate watchdog has warned.

The suggestion comes in a report by the Committee on Climate Change that assesses the risk that climate change laws will make companies less competitive than international rivals.

The study confirms past research showing that although UK emissions have fallen by about 20 per cent in the last 20 years, when the emissions of imported goods are counted as well, the country’s total carbon footprint rose by at least 10 per cent.

Critics have long argued that this shows policies to tackle climate change  have simply driven big emitters, such as steel and aluminium plants, to countries with more lax rules.

But there is no evidence of this, according to the committee, a statutory body set up under the 2008 Climate Change Act to advise on the best way of meeting the Act’s requirement for an 80 per cent cut in emissions from 1990 levels by 2050.

“Our analysis shows that offshoring of industry in response to low-carbon policies has had at most a minor impact in reducing production emissions, and that the carbon footprint would have increased more had production emissions not been reduced,” the report says.

Rather, emissions have fallen because there has been a switch from using coal to gas in power generation; because of other policies such as EU rules on reducing landfill and more recently, because of the recession.

Existing government measures to protect heavy energy users from the impact of low-carbon policies are making competitive risks “manageable”, it says, and will add just £5 a year to typical household electricity bills by 2020.

But the committee acknowledges that getting total UK emissions down will be difficult in the absence of a global agreement on cutting carbon pollution, which is why measures such as a carbon border tax might have to be considered.

Such taxes are contentious because some argue they can be easily used as a form of backdoor protectionism. From an environmental point of view, however, the main problem with such charges is they cannot cover enough emissions, said the Committee on Climate Change’s chief executive, David Kennedy.

“If you look at what proportion of total global emissions are embodied in traded goods, it’s less than 25 per cent, so you cannot have a comprehensive approach which is based on border tariffs,” he said, adding measuring the carbon content of goods is also very difficult.

But as the committee’s report says, such taxes could still be used as a “transitional measure”, if not an alternative to a global agreement.

The CBI employers group and EEF manufacturers body backed the committee’s emphasis on the need for support for internationally competitive industries.

“The committee is also right to stress the importance of compensating energy intensive industries to secure their competitiveness and long-term investment in Britain. The government must now respond by committing to a compensation package for the long-term not just for the next three years,” said EEF climate policy head, Gareth Stace.