Are emission taxes impeding Western companies to succeed?

A year ago, the idea of ​​a marginal carbon tax was more hypothetical than an actual plan. But a year ago the EU had not tightened its already strict emissions reduction targets, so a number of companies in highly polluting industries were forced to invest in emissions reductions. Now there is the brand new EU mechanism to adjust carbon limits and a proposal for a carbon limit tax in the United States. There is also talk that other countries will follow suit. The case of the US is particularly interesting. Washington was quick to respond to the EU's idea of ​​introducing a carbon border tax when it first came up earlier this year, and that response, while polite, was not exactly positive. None other than President Biden's Climate Commissioner John Kerry warned the EU that a carbon border tax should be the last resort. In mid-July, a group of Democrats in Congress drew up plans for nothing more than a marginal carbon tax on certain imports, such as steel, to reduce the emissions associated with those imports. According to proponents of the bill, the tax would level the playing field for domestic manufacturers who are subject to stricter carbon emissions regulations. "International cooperation will be critical to achieving net zero emissions," said one of the bill's authors, Delaware Senator Chris Coons, as quoted by Reuters. "We have a historic opportunity to show that climate policy goes hand in hand with creating economic opportunity as US innovators develop and distribute clean energy technologies." The idea of ​​the EU for a carbon dioxide border tax also came after an advance by industries that fear a loss of competitiveness if their products become more expensive than imports due to the strict EU emission regulations. At first glance, the carbon border adjustment mechanism has the potential to kill two birds with one stone: it helps European steelmakers and other major polluters clean up, and it reduces so-called carbon emigration by foreign producers by putting a tariff on their exports to the EU levies. But marginal carbon taxes are also potentially problematic. Unsurprisingly, China criticized the European Commission's tax proposal on the grounds that it violated World Trade Organization rules.