Essay by Eric Worrall

If Renewables are the cheapest form of energy, why does the EU need a carbon border tax to protect EU based industries?

Q&A: Can ‘carbon border adjustment mechanisms’ help tackle climate change?

The EU’s carbon border adjustment mechanism (CBAM) has been touted as a key policy for cutting emissions from heavy industries, such as steel and cement production.

By taxing carbon-intensive imports, the EU says it will help its domestic companies take ambitious climate action while still remaining competitive with firms in nations where environmental laws are less strict.

There is evidence that the CBAM is also driving other governments to launch tougher carbon-pricing policies of their own, to avoid paying border taxes to the EU.

It has also helped to shift climate and trade up the international climate agenda, potentially contributing to a broader increase in ambition.

However, at a time of growing protectionism and economic rivalry between major powers, the new levy has proved controversial.

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Analysis also suggests that the EU’s CBAM, in isolation, will have a limited impact on global emissions. 

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If nations lose carbon-intensive businesses because they close down or choose to do business elsewhere, this could harm the economies of nations trying to implement carbon pricing. At the same time, it could increase global emissions, if domestic manufacturing is simply replaced by more carbon-intensive imports.

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Read more: https://www.carbonbrief.org/qa-can-carbon-border-adjustment-mechanisms-help-tackle-climate-change/

The hallmark of cheap energy is you can manufacture products at a lower cost than other people. Why would anyone need a carbon tax on imports if their goods were already cheaper than everyone elses?

China dominates global manufacturing, because their low cost coal powered economy gives them a competitive edge.

If the cost of manufacturing an energy intensive product is 50% energy + 25% materials + 25% labor, halving the cost of energy reduces the manufacturing cost by 25%.

No such transformation is occurring in the EU. The EU is an economic hellscape, a place where ordinary consumers are punished with legally mandated higher prices thanks to carbon border adjustment taxes. The need for such a border adjustment tax is all the evidence anyone should need that renewables are a horribly expensive form of energy.

If renewables truly were delivering cheap energy to the EU, the EU would not need a border tax to prevent cheap imports from undercutting and wrecking EU based manufacturing. If renewable energy had any capacity to deliver cheap energy, renewable powered manufacturing hubs would be springing up across the EU, flooding the world with low cost energy intensive goods which even China would be unable to undercut.

Any day now, right? Do I need a /sarc tag?