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Are Carbon Tariffs a Good Idea?

Gina-Marie Cheeseman
| Thursday July 30th, 2009 | 0 Comments

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Imposing a tax on imported goods that are carbon-intensive is an idea being tossed around as much these days as driftwood on a shore. Energy Secretary Steven Chu said, “If other countries don’t impose a cost on carbon, then we will be at a disadvantage…[and] we would look at considering perhaps duties that would offset that cost.”

Earlier this month, Commerce Secretary Gary Locke mentioned carbon tariffs while speaking to the American Chamber of Commerce in Shangai. “It’s important that those who consume the products being made all around the world to the benefit of America — and it’s our own consumption activity that’s causing the emission of greenhouse gases, then quite frankly Americans need to pay for that,” he said. Locke later told reporters that Chinese officials expressed concerned about carbon tariffs. “They feel in essence it’s a tax on their carbon activity,” Locke said.

The House passed the American Climate and Energy Security (ACES) Act in June, which included a provision that would let the U.S. levy duties on imports of goods that are “carbon-intensive.”

In June, Jonathan Pershing, head of the U.S. delegation at the meetings in Bonn, Germany said the U.S. would not demand developing countries commit to binding reductions of their greenhouse gas emissions. “We’re saying that the actions of developing countries should be binding, not the outcomes of those actions,” Pershing said.

China has the highest carbon dioxide emissions. Most of China’s carbon emissions are from the production of steel, cement, aluminum, paper, and chemicals; the majority of which are consumed domestically and not exported. A total of one-third of China’s carbon emissions between 2002 and 2005 were from manufacturing goods for export, according to research by Geophysical Rseaarch Letters. Nine percent of China’s carbon emissions are caused by manufacturing products for U.S., and six percent are from making products for Europe.

Critics of carbon tariffs weigh in

Last week European Union (EU) environmental ministers met in Sweden where they rejected a French proposal to levy carbon tariffs. Speaking to reporters, the German State Secretary for Environment Matthias Machnig called carbon tariffs “a new form of eco-imperialism.”

Sunita Narian, the head of the Center for Science and Environment, based in New Delhi, said, “This (the proposal) is completely unacceptable. It will completely derail the Copenhagen process, which is already at a complicated stage and gridlocked right now.”

Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, said of carbon tariffs, “It does not abide by the rule of [the] WTO and, secondly, it’s not fair.”

Rajendra Pachauri, head of the Intergovernmental Panel on Climate Change (IPCC) criticized carbon tariffs. “I’m afraid that those that have been pushing these provisions probably don’t realize that all of this can cause a major negative reaction,” he said. He pointed out that the U.S. “has always stood for a free market system. Legislation to move away from that principle is clearly counterproductive.”

U.S. business groups sent a letter to Senate last week, expressing concerns about carbon tariffs in ACES. The letter called carbon tariffs “highly inflexible,” and said they were “likely to conflict with obligations the United States has undertaken in international trade agreements.” The business groups who sent the letter included the Emergency Committee for American Trade, the National Foreign Trade Council, the United States Chamber of Commerce, and the United States Council for International Business.


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