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The Role and Meaning of the Carbon Border Tax in the European Union and Russia
 
PIIS0021438-1-1
DOI10.18572/2312-4350-2022-2-89-94
Publication type Article
Status Published
Authors
Aida R. Salyakhova 
Affiliation:
University of Oslo
Academy of Sciences of the Republic of Tatarstan
Address: Russian Federation
Journal nameEnergy law forum
EditionIssue 2
Pages89-94
Abstract

The article analyzes experts’ opinions on climate change and the expediency of the introduction of the carbon border tax to review the European carbon border tax adoption initiative, takes note of the advantages and shortcomings related to the introduction of the carbon border tax, in particular, such as: leveling the playing field (the European Commission has singled out the border tax as the key instrument to guarantee that European Union companies would compete on equal footing with non-EU countries), the impact of carbon leakage on human health and ecology, the high price of the introduction and application of this tax. The article also comes to a conclusion that CBT (carbon border tax) should be in line with the policy and laws of the World Trade Organization (WTO). For Russia, in particular, the carbon tax will facilitate economy diversification and modernization, improve the air quality affecting human health and give a boost to the development of the renewable energy sector.

The object of studies is social relations in the introduction of the carbon border tax and the subject of studies is the European carbon tax adoption initiative as well as the role and meaning of the carbon tax for the European Union (EU) and Russia.

 

Keywordsenergy law, carbon tax, limitation of greenhouse gas emissions
Received09.08.2022
Publication date09.08.2022
Number of characters16239
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1 We are now witnessing massive climate changes, which raises concerns of the international community. The legal framework for the international cooperation on climate change is the United Nations Framework Convention on Climate Change (UNFCC) adopted in New York on May 9, 1992. Then, the Kyoto Protocol was adopted in Kyoto on December 11, 1997, that committed the parties to limit or reduce greenhouse gas emissions in the first commitment period from 2008 to 2012, and in the second commitment period from 2013 to 2020 for parties to the Doha Amendment to the Kyoto Protocol. After that, the Paris Climate Agreement was adopted on December 12, 2015.
2 The states that signed the Paris Agreement have a different view on the implementation of its provisions. Let us review the approaches developed in the European Union based on the experts’ opinions.
3 Legal publications of the EU member states note that the carbon border tax serves two main functions: leveling the playing field for competing manufacturers and creation of political leverage for more ambitious actions aimed at combating climate change in different countries [1].
4 The publications also emphasize that the consequence mitigation policy in different countries that is to a large extent integrated in international goods will affect commodity flows. The regulatory burden on domestic goods manifested as direct carbon price in form of a tax or an emissions trading system puts competitive pressure on manufacturers if they are unable to pay the accompanying costs. In this case, imported goods can have a larger market share if they are cheaper. The share of domestic manufacturers on the international market can decrease if competitors on those markets do not face a similar consequence mitigation burden. Carbon border price adjustment can counteract these impacts balancing the rules of the game. The second CBT goal is to put pressure on the countries lagging behind in the climate policy. CBT depends on climate figures and in the same way as sanctions can change the strategic estimate of the countries that trail behind and force them to take tougher measures to fight climate change. In order to reach this double goal, CBT needs to be developed thoroughly to leave no doubts that it has no underlying protectionist motives [2].
5 The European Green Deal is a response and a commitment to fight growing negative consequences of climate change [3]. President of the European Commission Ursula von der Leyen believes facilitating of actions aimed at the fight against climate change and providing the EU the possibility to become the world’s first climate neutral continent to be one of the biggest issues and opportunities of our times [4].
6 To respond to this challenge, the European Commission published the final message on December 11, 2019, describing the European Green Deal for the European Union and citizens of the Union [5]. The aim of this Green Deal is not only to increase target rate of greenhouse gas (GHG) emissions reduction in the European Union by 2030 [6] but to make the EU carbon neutral by 2050 [7]. The European Commission has adopted a new, more ambitious strategy of adaptation to climate change, and one of the key proposals is the introduction of the carbon border adjustment mechanism for separate sectors to lower the carbon leakage risk. The CBT goal is the protection of European business against carbon leakage and economic dumping.
7 On June 17, 2020, the European Commission presented its White Paper on leveling the playing field as regards foreign subsidies aimed at a new regulatory framework built on three modules. Module 1 is intended as a general instrument to address foreign subsidies that cause distortions in the internal market. Module 2 is intended to specifically address distortions caused by foreign subsidies facilitating the acquisition of EU targets. Last module 3 is dedicated to foreign subsidies within the EU public procurement procedure. The new instrument should be applied in a non-discriminatory manner to the subsidies provided in all third countries [8].
8 Final project proposals were presented in 2021 together with reconsideration of the EU emission trading system [9].
9 On July 14, 2021, the European Commission presented a draft of the climate law package: Regulation of the European Parliament and of the Council Establishing a Carbon Border Adjustment Mechanism and Annexes to the Regulation of the European Parliament and of the Council Establishing a Carbon Border Adjustment Mechanism.
10 Thus, the Green Deal of the European Union stipulates the appearance of a carbon border adjustment mechanism in respect of imported carbon intensive products that provides for an additional charge on products depending on the greenhouse gas emission intensity rate during their production. It is planned to expand the European emission trading system to cover new sectors and withdraw free emission allowances for aviation.
11 The following regulations were adopted in Russia during that period: Federal Law No. 296-FZ of July 2, 2021 On Limitation of Greenhouse Gas Emissions that establishes the framework for the legal regulation of relations in the business sphere and other spheresofactivityaccompaniedbygreenhouse gas emissions and performed in the Russian Federation, on the continental shelf, in the exclusive economic zone of the Russian Federation, the Russian part of the Caspian Sea; Resolution of the Government of the Russian Federation No. 3052-r of October 29, 2021 On the Approval of the Strategy of the Socioeconomic Development of the Russian Federation with Low Greenhouse Gas Emissions until 2050; Federal Law No. 34-FZ of March 6, 2022 On Performance ofanExperimentonLimitationofGreenhouse Gas Emissions in Some Constituent Entities of the Russian Federation.

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1. 1-2. Mehling M., Van Asselt H., Das K., Droege S. and Verkuijl C. Designing Border Carbon Adjustments for Enhanced Climate Action. American Journal of International Law, volume 113, issue 3 (July 2019). The European Commission. Communication from the Commission, The European Green Deal, COM/2019/640.
2. 3. Von der Leyen Ursula. A Union that Strives for more — My Agenda for Europe. https://ec.europa.eu/  commission/sites/beta-political/files/political-guidelines-next-commission_en.pdf
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11. 15. Simon F. ‘Jury Is Still out’ on EU’s Carbon Border Tax, Hogan Says, 2020.

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