EU leaders to consider carbon border tax

French president Emmanuel Macron is expected to raise the topic of an EU carbon border tax at a summit of EU leaders due to be held 17-18 July.

EU leaders will meet in Brussels next month to discuss the EU's Covid-19 recovery plan and a new long-term EU budget.

Macron has said that he can be "counted upon" at the meeting to also put forward issues for discussion including an EU carbon border tax and "greening" the EU's common agricultural policy.

"The European level is essential if we want a real carbon price, a real border tax, real investments for our industries and to transform them and for our agricultural policy," Macron told delegates at an environmental conference in Paris.

"The priority for me in the coming months is to avoid bias and distortion of competition is to establish a truly European carbon tax, to really raise the reference price, get a floor price and border tax. This is key if we want to meet not only our goals, as we should, but also raise our 2030 targets with a credible trajectory," Macron said.

Speaking yesterday with Macron in Berlin, German chancellor Angela Merkel said proposals for climate action and a "border adjustment tax" would be supported by Germany.

"We need such a tax. It has to be decided together with our climate targets. It's important for Germany — but I don't think there's any contradiction with France — that it's WTO compatible," Merkel said.

"If we have very ambitious climate protection goals, then we have to protect ourselves from importers whose products are more climate harmful or emit much more CO2," she said.

Merkel identified two potential "protection" options for industry, notably granting compensation to energy-intensive industries for the power price as well as a border adjustment tax.

European Commission president Ursula von der Leyen has supported an EU-wide carbon border tax, having initially put forward the idea as part of her green deal package of measures last year.

In May, the commission presented a proposal for the EU's six-year budget period. The draft budget included estimates of revenue reaching €5bn-14bn ($5.6bn-15.7bn) from a carbon border adjustment mechanism.

By Dafydd ab Iago