The EESC warns of the risk of a "green" trade war

Since the signing of the Kyoto Protocol, various jurisdictions throughout the world have implemented Emissions Trading Systems (ETSs). The EU ETS is the largest and longest-standing, and is to be overhauled in line with the EU’s 2030 Climate and Energy Policy Framework. In an opinion adopted at its September plenary session, the EESC provides an overview of the EU ETS and of other ETSs globally, and outlines approaches to regulate trade in this new deal for carbon markets.

In its opinion, the European Economic and Social Committee reaffirms its support for the European Green Deal, calls for the Commission to monitor local carbon markets across the globe to identify the best practices that could be useful for revising the ETS, and weighs the advantages and disadvantages of implementing an EU carbon adjustment mechanism, both in terms of the environment and of trade.

One of the key points in the opinion is that the EESC is concerned by asymmetrical carbon price levels between different jurisdictions and markets. A level playing field between industries in the EU and abroad could indeed be undermined because of the development of different emissions trading systems, but also because of competition from third markets in countries that do not have ambitious climate policies. It therefore asks the Commission in the coming months to table a Carbon Border Adjustment Mechanism which would shield EU energy-intensive companies from cheaper imports from third countries with no or weaker climate policies. The EESC advocates implementing carbon border adjustments in compliance with World Trade Organisation rules, so as to prevent a trade war. (dgf)