Taxation mechanisms for reducing CO2 emissions - Related Opinions
The proposed opinion will look at new approaches to more fairly distributing the burden of transformation towards a sustainable Europe.
European industrial, energy and climate policy is hampered by contradictory requirements on the price for Greenhouse effect Gas (GHG) emissions: on the one hand, high prices would be necessary to incentivise investment and changes in consumption patterns; on the other, the preservation of the external competitiveness of EU energy-intensive industries, as well as the prevention of “carbon leakage”, would require low prices.
The proposed own-initiative report investigates the technical and legal feasibility of Border Adjustment Measures for the internal price of GHG emissions: importers pay the price, exporters get it refunded, as it already is the case for VAT. The refund of the GHG emission price to exporters could be based on a VAT-like accounting system. The GHG emission price paid by importers could be based on the basic metals and materials content of the product. This system would be in line with WTO rules, and rely upon fully proven methodologies.
The absence of economic and social convergence among Member States and regions is a threat to the political sustainability of the European project and all the benefits it has brought to European citizens. Developing economic and labour market resilience with economic, social, environmental and institutional sustainability should be the principle guiding policies. This will foster upwards convergence and fairness in the transition towards a climate-neutral economy while managing the challenges posed by digitalisation and demographic change.
Just a few days ahead of last December's climate summit COP24 in Poland, the European Commission published its long-term strategy "A clean planet for all" presenting its vision for achieving net-zero greenhouse gas emissions by 2050 through a socially-fair transition in a cost-efficient manner. While the document does not contain any new policy proposals, it provides the direction of travel of EU climate and energy policy and frames what the EU considers as its long-term contribution to achieving the Paris Agreement temperature objectives in line with UN Sustainable Development Goals.
The EESC supports the Commission's Action Plan on financing sustainable growth, aimed at reorienting capital flows towards sustainable investment, and welcomes the legislative proposals stemming from it, on fiduciary duties, a taxonomy and benchmarks. The proposed gradual approach for its implementation, beginning with the work on a European sustainability taxonomy, is preferable. However, a subsequent extension of the initial taxonomy, based on environmental aspects, to social sustainability and governance goals will be necessary. Attention should be paid to the feasibility and proportionality of legal obligations.
Finance needs to be mobilised to serve the goals of the Paris Agreement on climate change, create jobs and enable Europe to have a leadership in climate technologies. Moreover, money flows need to be re-directed from polluting technologies towards innovative solutions that will help Europe close the emissions gap. Admittedly, these investments will all be profitable in the long run, but how to "prime the pump"? The EESC's own-initiative opinion on the European Finance-Climate Pact will suggest solutions that can make it happen.