from Energy, Security, and Climate and Energy Security and Climate Change Program

More on the Chinese Carbon Tax

May 19, 2010

Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

More on:

China

Fossil Fuels

I wrote about the proposed Chinese carbon tax on Monday. Xinhua reports (h/t Weathervane -- the link is to a two month old article that I hadn’t noticed) that it might be partly aimed at avoiding any U.S. or European carbon tariffs:

“Jia also pointed out that the levying of a carbon tax can reduce risks of being hurt in international trade friction, as some developed countries have mulled levying such a tax and will also likely impose carbon tariffs on imported products from other countries that do not have quotas for emissions reductions – like the American Clean Energy and Security Act passed by the U.S. House of Representatives last June. ‘But if we have already levied a carbon tax in China, the other countries would be suspected of double taxation by imposing carbon tariffs, which violates World Trade Organization agreements,’ he said.”

Set aside whether carbon tariffs are wise. (I’m skeptical in most cases.) This argument won’t fly if the Chinese tax is 10-40 RMB per ton of carbon dioxide, which is the range being floated. Those numbers are far lower than the floor price in Kerry-Lieberman, and also much lower than prevailing carbon prices in the European Union carbon market. If the Chinese want to use a domestic carbon tax as the sole basis for arguing against tariffs, they’d need to contend that their tax is imposing the same costs on their industries as the United States and Europe are imposing on their own. Instituting a carbon tax that’s a fraction of what businesses in the developed world face won’t do that.

More on:

China

Fossil Fuels

Up
Close