Cop26: UK prefers emissions cuts over carbon tax

Brussels is planning a green tax on imports to promote clean technology in Europe

Britain is seeking ambitious climate plans ahead of November's Cop26 summit in Glasgow. AFP 

The Cop26 climate summit should pave the way for global emissions standards on carbon-intensive goods, a UK trade panel has said.

It said an agreement to cut emissions would be better than taxing imports with green tariffs, as proposed by the EU.

The idea of the EU's plan, which is part of a wider green overhaul, is to promote clean technology in Europe by making it expensive to import from countries with lower environmental standards.

But in a new paper on green trade, the UK government's Board of Trade said that agreeing to equalise these standards would be preferable to unilateral tariffs.

There are concerns that tariffs could provoke trade tensions with countries such as China and Russia, whose iron and steel producers would be among those affected.

Discussions on a global agreement to address what is known as “carbon leakage” could take place at Cop26, although trade officials expect that an agreement would take years.

“The first best solution to addressing carbon leakage is to remove the distortions at source,” the report by the trade board said.

This would involve an agreement for countries to “voluntarily adopt more ambitious environmental standards within fast timeframes”.

The report sketched out a four-year plan for negotiations in which countries would agree standards for carbon-intensive products.

It said Britain should use its presidency of Cop26 at this year’s summit in Glasgow to push trade issues to the front of the climate agenda.

Liz Truss, the UK’s International Trade Secretary, said free trade should be preferred to “green protectionist policies that hold back the global transition to a low-carbon economy."

The trade board said that unilateral tariffs risked being undermined by companies shifting their exports to countries without such a policy.

"If a country takes unilateral action to try to force other countries to improve their environmental ambition, they may risk stoking trade tensions," it said.

“Moreover, if countries adopt different unilateral measures this could lead to a regulatory patchwork emerging across countries, which creates new barriers to trade.

“To avoid these risks, any policy solution should ideally be developed with as broad a group of countries as possible, agreed multilaterally and open to all.”

The plan put forward by the EU is part of a wider push to cut emissions 55 per cent by 2030 compared to 1990 levels.

The EU’s Economy Commissioner Paolo Gentiloni said the tariff would encourage greener standards outside the bloc’s borders.

It will “ensure that our climate ambition is not undermined by foreign firms subject to more lax environmental requirements,” he said.

In the US, two Democratic senators this week put forward a similar plan for carbon tariffs on steel, coal and other products.

Some senators want to include the tariff as part of a $3.5 trillion budget bill which was unveiled last week.

The UN’s trade body, UNCTAD, said the impact on overall carbon emissions of the EU's plan was likely to be limited.

Global emissions would fall by about 0.1 per cent, it said, with the EU urged to use the tax revenue to support decarbonisation in developing countries.

The Global South is demanding that rich countries come up with $100 billion in annual climate funding which was promised more than a decade ago.