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23 January 2020

Our Ursula rattles sabre in Davos at Chinese and other climate fools

It looks like the EU and its political position against climate change, could become critical in holding other major trading centers to account, including China. Usually that role would be reserved for the US President, but at present that’s not possible. At the Davos World Economic Forum this week, the President of the European Commission, Ursula von der Leyen, told China to price carbon or face massive European import duties.

The same threat is a veiled one to both the USA and India as well, and if the Commission gets its way, a global price on carbon will accelerate renewables into parity with fossil fuels, and halt coal and gas plant rollouts stone dead.

The idea is straightforward and is a form of what you may describe as justified protectionism. While economically it seemed OK in the 1990s to export manufacturing work to China, in the process exporting jobs and cutting down on full employment at home, this time around it does not seem reasonable to have carbon-spewing ships carry those manufactured products all the way back to the European market, or to use up tons of carbon in making them. If that carbon cost becomes reflected in European pricing, then much of Europe could make a comeback in the manufacturing industries, because the transport distances are smaller, and there is an existing carbon pricing scheme which discourages wasteful manufacturing.

Her idea is to impose a tax as a carbon border adjustment “which would hit importers from countries that do not respect international climate goals,” which of course would hit India and the US as well.

It will be proposed and then introduced late in 2020, which gives time for lots more sabre rattling and persuasion and compromise on the world stage.