EU Swings Between Carbon Market: Tariffs, Cooperation

On January 1, the European Union kicked off its Carbon Border Adjustment Mechanism (CBAM), a carbon tariff system involving steel, cement, electricity, aluminum, fertilizers and hydrogen imports. The scheme levies taxes for embedded emissions in accordance with auction prices under the EU Emissions Trading System (ETS) allowances. As the world's first transnational carbon market set up in 2005, the EU ETS has developed a flexible mechanism of carbon allowances levied on a growing number of industries. China's Ministry of Commerce said the CBAM is an unfair and discriminatory treatment which ignores the country's green contributions. On May 7, China, the EU and Brazil launched the Open Coalition on Compliance Carbon Market, the world's first carbon-pricing cooperation initiative between developed and developing economies. Experts said the EU's swings between tariffs and cooperation reflect the changing landscape of international trade and investment resulting from geopolitical games.