The European Commission is holding a meeting in June that is, on the face of it, very boring. The EU’s senior bureaucrats will be considering at what level to set a tax on carbon emissions for goods imported into the bloc.
Yet the consequences will be pivotal – both to the future of the EU’s world-leading system for managing corporate carbon emissions, and for how this market develops around the world. It’s therefore an absolutely vital part of the battle for net zero global emissions.
Let’s first understand what has prompted the tax. Within the EU, carbon emissions are governed by a cap-and-trade system: a cap is set on the total amount of carbon emissions that can be emitted, and power providers and other firms each get an allowance for how much they can emit themselves.