Franco-German cooperation in support of the European Green Deal:
pricing of carbon in and at the border of Europe - published April 27, 2021

 

The European Union (EU) has proclaimed the Green Deal as its principal growth strategy,
announcing as its key target to reach carbon neutrality by 2050. In consequence, effective
immediately, member states will have to increase their efforts to reduce emissions, inducing
steeply rising mitigation cost. The best coordination signal in this endeavor would be a uniform
price on carbon which encompasses all actors, sectors, regions, and technologies. To ascertain
that all goods consumed in the EU face the same carbon price, it is sensible to credibly prepare
the implementation of border carbon adjustments (BCA) applied to imported goods. To preserve
the EU’s self-conception of taking responsibility for the global climate it should refrain,
however, from exempting exports from carbon pricing. A BCA mechanism should be considered
by the EU only after having established a clear and credible uniform carbon pricing mechanism
within its jurisdiction. This credibility is key to provide incentives to other countries, especially
the US and China, to join a far-reaching international alliance for carbon pricing.