Getting the carbon price right through climate border measures: a Chinese perspective

Abstract

Border carbon adjustment (BCA) has had a high profile in climate and trade talks, due to differences between the EU and China. Much of the debate has revolved around the possibility of EU taxation on Chinese exported products in order to both avoid carbon leakage and support the EU's unilateral efforts to curb CO 2 emissions. This article examines the motives behind the rejection of BCA by Chinese officials. In addition to the conventional argument that BCA is inefficient and unfair, new explanations are provided for China's stance. First, China claims that its exports of energy-intensive products are already taxed, with the CO 2 e price for Chinese export taxation averaging European Union Emissions Trading Scheme CO 2 price levels. Second, the EU trade dispute concerning Chinese export restrictions -occurring just a few years after disputes concerning the subsidization of similar productsprovides evidence that the EU's stance on trade issues is incoherent, casting doubt on its willingness to genuinely get the carbon price right for products entering its market. Finally, BCA options contemplated by Annex I countries unilaterally convey the signal that China is perpetually falling short of international standards and of sharply increasing responsibilities.Les mesures d'ajustements aux frontières (MAF) pour le carbone furent l'objet d'une forte visibilité au sein des négociations sur le climat et le commerce, dû aux différences entre l'UE et la Chine. Une grande partie du débat a porté sur la possibilité d'une taxe européenne sur les produits de l'exportation chinoise de manière à éviter les fuites de carbone tout en favorisant les efforts unilatéraux de réduction des émissions de CO 2 de l'UE. Cet article examine les motifs à la base du rejet des MAF de la part des fonctionnaires chinois. En plus de l'argument conventionnel quant à la nature inefficace et injuste des MAF, de nouvelles explications sont données pour la position chinoise. Premièrement, la Chine soutient que ses exportations de produits à forte intensité énergétique sont déjà soumis à une taxe, le prix de la taxe appliquée au CO 2 -équivalent de l'exportation des produits chinois correspondant en moyenne au niveau du prix du CO 2 dans le SCEQE. Deuxièmement, le débat de l'UE sur le commerce concernant les restrictions des exportations chinoises -ayant lieu quelques années seulement après le débat concernant la subvention de produits similaires -démontre l'incohérence de la position de l'UE sur la question commerciale et remet en question l'authenticité de sa volonté de justesse dans la fixation du prix du carbone pour les produits accédant à son marché. Finalement, les options pour les MAF contemplées par les pays de l'Annexe I sont celles qui indiquent unilatéralement une incapacité perpétuelle de la Chine à satisfaire les standards internationaux et de responsabilités fortement accrues.

Climate policy and the ‘carbon haven’ effect

“…Its effect on international negotiations is unclear: it could be used as a 'strategic stick' to force other countries to join the abating coalition 120 , but they could also trigger a trade war because of 'green protectionism' suspicions 8 . For example, China strongly opposes BCA and claims that energyintensive exports are already taxed 121 . Climate coalition countries have an incentive to deviate from the optimal carbon tariff rate to change their terms of trade 21 , and even with good-quality data, there is room for judgement discretion in carbon content estimation and hence disguised protectionism 122 .…”

The case for taxing carbon at the border

“…There is discussion in India -and in a somewhat different context in China Wang and Voituriez, 2010;Voituriez and Wang, 2011) -about imposing export taxes on high-carbon exports to steer the economy towards lower carbon intake, to avoid being locked into a high-carbon capital stock, and more generally moving towards a consumption-based approach. If this came to pass, it would be equivalent to what is proposed here and would have the additional advantage of assuring governments that the taxes would end up in their coffers.…”

Multi-Level Governance: Explaining the “climate-focused” behavior of Chinese exporting companies

“…In doubt of the intention of major developed countries, China has been inclined to interpret the proposed measures as arising from “green protectionism” and violating World Trade Organisation (WTO) rules. 12 From the view of Chinese decision-makers, Chinese exporters have already been subject to energy taxes for carbon-intensive goods (Voituriez and Wang, 2011; Zhang, 2010).…”