Climate regulation: EU carbon import tax
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Why is it a big deal?
For the first time, climate legislation is directly intertwined with global trade. The carbon import tax will impact the price of raw materials that are needed to build cities and infrastructure. Plus, companies are now faced with figuring out the amount of greenhouse gases that are emitted to make the goods being imported.
Why does the EU want a carbon tax?
The EU is using regulation as a tool to persuade countries to commit to low-carbon trade, according to the Wall Street Journal. While the U.S. approached climate policy from another angle by incentivizing low-carbon technology with tax incentives in the Inflation Reduction Act. The EU already has an emissions trading system, the import tax ensures that EU industries don’t lose out to international competitors from countries where emitting carbon is free.
