Tuesday, December 13, 2022

World’s first carbon border tax lands in Europe

Presented by Chevron: Your guide to the political forces shaping the energy transformation
Dec 13, 2022 View in browser
 
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By Arianna Skibell

Presented by Chevron

BERHEIM, GERMANY - NOVEMBER 13: Steam rises from the Niederaussem coal-fired power plant operated by German utility RWE, which stands near open-pit coal mines that feed it with coal, on November 13, 2017 near Bergheim, Germany. The COP 23 United Nations Climate Change Conference is taking place in Bonn, about 60km from the Niederaussem plant. The nearby Rhineland coal fields are the biggest source of coal in western Germany and the power plants in the   region that they supply emit massive amounts of CO2. (Photo by Lukas Schulze/Getty Images)

Steam rises from a coal-fired power plant near Bergheim, Germany. | Lukas Schulze/Getty Images

In a global first, the European Union reached a preliminary agreement today to impose a carbon tax on imported goods.

The move is intended to help European industries avoid being undercut by cheaper goods made in countries with weaker greenhouse gas emission rules.

The proposal has already upset supply chains around the world and rankled E.U. trading partners, including U.S. manufacturers that worry the plan will make it more challenging to export goods to Europe. High-emitting developing countries in particular have expressed frustration.

But the deal has also prompted other countries, such as the United Kingdom and Canada, to consider implementing their own border adjustment taxes. Democratic lawmakers in the United States have likewise proposed a similar border tax system.

And European officials say the tariff would be key for shoring up efforts to combat the climate crisis. The E.U. is one of the largest players in international trade, along with China and the U.S.

The deal was reached after all-night negotiations among European national governments and the European Parliament, capping off a year of talks. The plan is slated for adoption in the next few weeks, along with a larger legislative package aimed at slashing planet-warming pollution.

How it works : Companies importing products such as cement, steel, iron, fertilizer and hydrogen would be required to buy certificates to cover all the carbon dioxide emissions associated with those goods, such as their production and transportation.

Notably, the provision includes indirect emissions, or the carbon pollution from the electricity used to manufacture the imported goods. The bulk of emissions from certain goods, such as aluminum, comes from the huge amounts of electricity used in production.

The tax comes amid heightened trade tensions between Europe and the U.S. after the passage of the Inflation Reduction Act, which offers generous tax credits for electric vehicles made in the U.S. and free-trade allies. European leaders have argued that the boon unfairly disadvantages the continent's manufacturers.

 

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Inflation Reduction Act

A person filling a glass with tap water.

Drinking water and wastewater systems are angling for Inflation Reduction Act funds. | SHTTEFAN/Unsplash

Operators of the nation's power-hungry water and wastewater systems are eager to dip into a fledgling $27 billion program taking shape under the Democrats' climate spending bill, the Inflation Reduction Act, write Hannah Northey and Jean Chemnick.

They're now calling on EPA to make crystal clear they can apply for money in the Greenhouse Gas Reduction Fund.

 

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Power Centers

Jennifer Granholm speaks.

Secretary of Energy Jennifer Granholm announces a breakthrough in fusion research. | J. Scott Applewhite/AP Photo

Fusion breakthrough
Energy Secretary Jennifer Granholm formally announced a major scientific milestone in fusion energy technology today, after the news broke earlier this week, writes Ben Lefebvre. After decades of trying, DOE scientists produced a fusion reaction that generated more energy than it consumed.

"It's the first time it's ever been done at a laboratory. Simply put, this is one of the most impressive scientific feats in the 21st century," Granholm said in a capacity-filled auditorium at the Department of Energy's headquarters in Washington.

The moderate path
New Mexico Democratic Rep.-elect Gabe Vasquez said that when he showed up on Capitol Hill for new member orientation last month, people went up to him and said, "Wow! We didn't think you were going to pull it [off]!" writes Kelsey Brugger.

The incoming congressman for New Mexico's 2nd District was one of only three incoming Democrats to beat a Republican incumbent. Some see his rise as evidence of the state oil industry's decline.

Hydrogen push
Many of the world's largest energy companies and a Bill Gates-led group are joining an industry-led initiative to measure and map the emissions footprint of "clean" hydrogen, writes David Iaconangelo.

The Inflation Reduction Act established the first-ever production tax credits for lower-carbon hydrogen, lifting expectations among investors and advocates of the fuel.

 

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The average fuel economy of 2021 model vehicles sold in the U.S. remained flat, while emissions dipped slightly that year.

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That's it for today, folks! Thanks for reading.

 

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