The European Union will levy a carbon emission tax on its borders. Switzerland, as a pioneer in this regard, is one of the countries with the highest carbon dioxide tax in the world. Swissinfo will introduce you to the origins.
Tariffs are imposed on imported products from countries with lower climate and environmental standards to protect European companies from unfair competition. This is the goal of the carbon border tariff policy officially announced by the European Commission on July 14.
The carbon dioxide tax is one of the main measures of the "European Green Pact". It should initially cover imported products from industries that generate large amounts of emissions such as electricity, cement or steel. "We need to balance domestic and imported carbon prices" to avoid factories moving to countries where carbon prices are lower than those of the EU. Pascal Lamy, the promoter of the EU carbon border tax and former Director-General of the World Trade Organization, told Swiss French Radio and television station RTS explained.
"This is a wise and necessary move," Philippe Thalmann, professor of environmental economics at the Federal Institute of Technology in Lausanne, told Swissinfo. He explained that companies within the EU system must pay for carbon dioxide, and border taxes will prevent circumvention of the EU system. The EU Greenhouse Gas Emissions Trading System (SSQE) was established in 2005. It is based on the principle of “who pollutes who pays” and involves more than 10,000 companies in the power, manufacturing and civil aviation industries. The current emission allowance is about US$50.
The EU carbon tariff has not yet reached a unified opinion. In April this year, in a video conference with Emmanuel Macron and Angela Merkel, Chinese President Xi Jinping expressed his opposition and denounced the “trade barriers” set up in the name of climate change.
Swiss carbon dioxide tax
Switzerland has imposed a carbon dioxide emission tax on fossil fuels (mainly heating oil and natural gas) since 2008. This measure was decided by the Parliament in 2007 because Switzerland had failed to meet its climate goals before. Its purpose is to encourage owners to reduce fossil energy consumption for heating, for example, replacing oil-fired boilers with heat pumps, thereby reducing carbon dioxide emissions.
The current tax rate is 96 Swiss francs per ton of carbon dioxide, or 0.25 Swiss francs per liter of diesel. Due to insufficient reduction in greenhouse gas emissions, the tax rate will be increased to the current maximum limit of 120 Swiss francs in the legislation by 2022.
About two-thirds of tax revenues are returned to the people and the economy. Factories that consume a lot of fossil fuels can apply for tax exemption as long as they promise to reduce emissions. The Swiss Environment Minister Simonetta Sommaruga said that the carbon dioxide tax, which incentivizes emission reductions, is “widely accepted”.
Is this measure effective?
Philip Talman said: "Facts have proven that this tax is effective in industries that use fossil fuels to generate heat." He pointed out that, in fact, Switzerland has the largest reduction in emissions from the construction industry . "This tax is also very effective for industry because it forces companies that want tax exemptions to reduce their emissions."
What's the situation around the world?
"There are two ways to price carbon: an emissions trading system and a carbon dioxide tax. The choice depends on the country or industry," explains Philip Talman.
Data from the World Bank shows that in addition to EU countries and Switzerland, there are more than a dozen countries in the world that have adopted one or two of these models. These countries include Canada, Mexico, China and South Africa.
In 1990, Finland became the first country in the world to levy a carbon dioxide tax. Currently, the country with the highest tax rate is Sweden, at 137 U.S. dollars per ton, followed by Switzerland (101 U.S. dollars).
Source : Swissinfo.ch
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