One of the most ambitious government schemes to combat climate change, the European Union’s Green Deal is a set of policies aimed at bringing the economy of this group of European countries to net zero emissions by the year 2050.
This is a unique and first of its kind initiative. But it is not easy to move towards any such ambitious goal for the first time. Not easy because everything will be new and for the first time.
The earliest effect of this would be that goods produced under emission-reducing regulations in EU countries would be costlier than the rest of the producers. This will now make EU countries less competitive against their global rivals.
Now to tackle this problem, EU policy makers are devising a way to punish the import of carbon-dense goods. Its name is Carbon Border Adjustment Mechanism (CBAM) and the market is hot for discussions around it. While the European Union views this Carbon Border Adjustment Mechanism (CBAM) as an integral part of its carbon deal strategy, as it seeks to achieve carbon neutrality by 2050 under the goals of the Paris Climate Agreement, There is also a view that this rule is a form of protectionism which will not give equal opportunity for business to all.
In the same sequence, a few months before the European Commission’s parliamentary proposal on CBAM came, some international experts came together to express their opinion on the issue, through a virtual meeting.
Directing the discussion, Genevieve Pons, director-general and vice-president of the Institute Jacques Delors, said, “The European Union has set a difficult and ambitious climate target for itself. The CABM is essential to achieve this goal and to limit the rise in global temperature. ” But to address its complexity, he mentioned “diplomacy, dialogue and methods”. Responding to the issue of protectionism, he said that “we have to be fair and deal respectfully with all countries.” Also, we have to use the revenue from CABM properly. ”
Moving the discussion forward, Pascal Lamy, former Director General of the World Trade Organization and former European Commissioner for Trade, said, “The CABM must adapt to the World Trade Organization (WTO) in order to be acceptable. Discrimination is the most important principle of the WTO and CBAM must conform to it so that all trading parties are respected. There should be no discrimination between domestic production and foreign production, because not doing so will not give equal opportunity to everyone. A system like CABM is important to be tested as it will remove the suspicion of discrimination. The ultimate objective of CBAM is to protect the environment and this objective should be respected by all. ”
At the same time, Arunabh Ghosh, Founder-CEO of Energy, Environment and Water Council (CEEV), emphasized on climate ambition, trust, and cooperation. Keeping his apprehensions about CABAM, Arunabh said, “There is a lot to be done to continue on the path of being net zero at present. And implementing this new system without any standard methodology will pose serious challenges. ” Putting another important aspect of this, he said, “We also have to think about how the disputes related to this will be resolved.” Ending his talk, he said, “It is very important to have a private-sector dialogue among all this because nothing will happen with the governments’ dialogue.”
But justifying the timing of this policy, Bernice Lee of the Hoffman Center for Sustainable Resource Economy, reviewing it said, “There is a need to consider the cost of implementation of this system.” There is no doubt that we want to protect the integrity of climate policies and for this, trade and investment will have to adapt to climate change policies. CBAM is just the beginning. “