Steel, cement and fertilisers are all major exports of developing countries, and their production is highly polluting. Should rich countries impose a carbon border tax to penalise emissions by these industries in developing countries, hopefully encouraging them to adopt greener technologies? Or will it merely impose a cost on developing countries and leave them stranded without the money or technology to green these industries?
Questions such as these are being debated at the ongoing 26th Conference of Parties, where world leaders are negotiating on rules on carbon markets under Article 6 of the Paris Agreement. These rules would put a price on carbon emissions and allow international sales of carbon credits.
A carbon border tax is one of the tools of carbon pricing that developed countries have suggested. But unless rich countries help developing economies like India access the funds and technology needed to transition to clean alternatives, a carbon border tax penalising the export of carbon-intensive products such as steel and cement would be unfair, say experts. It would impact growth and employment opportunities in developing countries, they point out.
Decarbonising global trade
Why did decarbonising global trade become imperative? Around 27% of global carbon dioxide emissions in 2015 were linked to international trade, according to an Organisation for Economic Co-operation and…