THE STATE OF THE EUROPEAN UNION Towards a new legislative term

THE EUROPEAN GREEN DEAL AND CARBON LEVIES: THE CARBON BORDER TAX AND REVISION OF THE EUROPEAN EMISSIONS MARKET 111 litical tool that illustrates the EU’s increasingly important regulatory power in the world. Europe’s carbon border mechanism makes access to its strong single market conditional on companies from third countries meeting environmental standards that the EU has also set for its own producers. If importers wish to retain a competetive access to the single mar- ket, avoiding the penalty resulting from the application of this tariff, they will be forced to innovate and reduce the emissions generated in their production processes. The CBAM, then, is a pillar of what has come to be called the European Green Deal’s external dimension. The EU is aware that it alone will not be capable of meeting global climate goals, as it accounts for only 9% of the world’s GHG emissions. So it must employ a strat- egy to encourage other countries to pursue sufficiently demanding decarbonisation policies. True, the CBAM must go hand in hand with other climate diplomacy measures that take into consideration both the geopolitical context and the possible difficul- ties involved in applying it in other countries. The EU, then, must act as a constructive associate through the forging of green alliances with its trading partners. The EU should give special treatment to developing countries so that CBAM application presents no insur- mountable difficulties to exporting their products into the single market. The financial assistance the EU ex- tends in the framework of its cooperation policy will play an important role here. Ultimately, as the moment of application approach- es, it remains to be seen whether the introduction of the CBAM prompts a significant reduction in global emissions. There is a risk that instead of incentivising greater decarbonisation from the EU’s trading partners the CBAM will lead to a segregation of international markets and even to the outbreak of a series of trade wars. At worst, some countries could think that export- ing to the EU with this new tariff will prove too costly for its industry and they will choose to look elsewhere to other, less environmentally demanding markets. Only time will tell whether this innovative project en- capsulated in the CBAM triggers a virtuous cycle in the battle against climate change or, on the contrary, adds further strife to the already delicate situation of interna- tional trade at present. Proposals – All the legislative proposals contained in the “Fit for 55” package, which develop the policies provided for in the European Green Deal and raise the EU’s climate ambition between now and 2030, must be rapidly adopted by the Member States and reach their full potential. – The deadlines for the implementation of two key cli- mate measures approved by the EU in 2023 must be particularly respected by European countries: (i) the reform of the European Emissions Trading System, which accelerates the rate of reduction of green- house gas emissions on EU territory and makes com- panies pay more for their carbon pollution; (ii) the in- troduction of a carbon border tax for importers from third countries so that the increase in carbon prices associated with the first reform does not penalise the global competitiveness of EU producers, nor prompt them to flee to territories with laxer environmental standards. Abbreviations – CBAM: Carbon Border Adjustment Mechanisms. – COP: Conference of the Parties. – GHG: Greenhouse gases. – IPCC: Intergovernmental Panel on Climate Change. – WTO: World Trade Organisation. – EVP: European Green Pact. – ETS: Emissions Trading Scheme. – EU: European Union. References Blanchard, Olivier y Pisani-Ferry, Jean (2021): Una es- trategia económica contingente para la próxima fase (policy paper), en Groupe d’Études Géopolitiques (6.5.2023). Available at: https://legrandcontinent. eu/es/2021/05/06/una-estrategia-economica-con- tingente-para-la-proxima-fase/ Benson, Emily; Majkut, Joseph; Reinsch, William y Steinberg, Federico (2023): Analyzing the European