Carbon tariffs will hurt trade, national interests, and consumers

Carbon tariffs are a bad idea that won’t go away, and now the European Union has launched the first one, the Carbon Border Adjustment Mechanism . The goal is to pressure non-EU countries into imposing EU-level costs on carbon dioxide emissions from the production of goods. If countries such as the United States don’t meet the standards the EU sets, they get tariffed.

Since over 80% of the world’s energy comes from coal, natural gas, and oil, which produce carbon dioxide emissions, a carbon tariff is a tax on the energy that makes modern life possible. Therefore, the EU will be imposing tariffs on sovereign countries that use the energy necessary to meet basic needs and improve quality of life.

Unhelpfully and closer to home, Sens. Chris Coons (D-DE) and Kevin Cramer (R-ND) have a new bill called the PROVE IT Act to lay the groundwork for a U.S. carbon tariff by standardizing carbon emission measurements to help levy taxes.

Yet carbon tariffs would have almost no effect on global temperatures. Even if the U.S. and every other country in the Organization for Economic Co-operation and Development eliminated all greenhouse gas emissions, it would avoid just 0.5 degrees Celsius of warming by 2100, as calculated by a Heritage Foundation model that clones the one used by the Energy Information Administration.

If that extreme scenario of zero emissions would have that small of an effect, the impact from elaborate, pricey carbon tariff schemes would be hard to measure.

In return for little to no benefit, there are plenty of costs. Carbon tariffs could derail future trade agreements the U.S. may negotiate with the United Kingdom, EU, Pacific Rim countries, and other allies. They would make these agreements more complex, add more negotiation failure points, give other countries a major say in America’s domestic policies, and incentivize special interests to game agreements for their own advantage.

In trade agreements, it’s a mess dealing with trade-unrelated issues such as carbon tariffs. The solution is that trade agreements must stick to trade. Separate issues should be treated separately.

Trade agreements are supposed to lower trade barriers. Carbon tariffs would raise barriers, becoming a new form of protectionism.

Read the full article at the Washington Examiner.