Friday, February 12, 2021

We should be welcoming climate tariffs, not condemning them

The UK apparently wants to put border carbon adjustments, AKA "climate tariffs", onto the G7 agenda as a means of encouraging countries to adopt strong climate policies and meet their emissions reduction targets. But Labour's Trade Minister Damien O'Connor is worried about this:

Carbon tariffs proposed by the United Kingdom and European Union are “ad hoc” interventions which may fall foul of World Trade Organisation rules, the trade minister says.

The UK, EU, and United States have proposed tariffs on trade from countries which have weaker climate regimes, in a bid to encourage greater climate action and protect domestic industries subjected to comparatively higher carbon taxing.


It remains unclear how such tariffs could affect New Zealand’s trade. Trade Minister Damien O’Connor​ said such “ad hoc” trade interventions appeared a long way off, and he had not yet considered joining Australia in protest.

He suggested such trade tariffs would not fit within World Trade Organisation (WTO) obligations.

(Trade experts believe border carbon adjustments to equalise carbon prices are legal under WTO rules).

O'Connor is making National-like noises about how such interventions must be "based in science". But the rationale is pretty clear: border carbon adjustments help prevent "carbon leakage" (polluting industries relocating to countries with lax climate policy), while providing a strong incentive for countries to adopt strong policies and meet their targets. Australia opposes them for the simple reason that they are climate criminals, opposed to any action. But as a country which supposedly has policy and supposedly is worried about leakage, we should be encouraging this (and adopting such tariffs ourselves). The only reason O'Connor wouldn't is if he thinks that New Zealand is one of the delinquent countries which will be targeted - that is, if he has no faith in his own government's climate policy. But if that's the case, maybe he should focus on improving that policy, rather than trying to continue to profit by refusing to do our bit?