World’s first carbon border tax lands in Europe

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Dec 13, 2022 View in browser   By Arianna Skibell Presented by Chevron Steam rises from a coal-fired power plant near Bergheim, Germany. | Lukas Schulze/Getty Images In a global first, the European Union reached a preliminary agreement today to impose a carbon tax on imported goods. The move is intended to help European industries avoid being undercut by cheaper goods made in countries with weaker greenhouse gas emission rules. The proposal has already upset supply chains around the world and rankled E.U. trading partners, including U.S. manufacturers that worry the plan will make it more challenging to export goods to Europe. High-emitting developing countries in particular have expressed frustration. But the deal has also prompted other countries, such as the United Kingdom and Canada, to consider implementing their own border adjustment taxes. Democratic lawmakers in the United States have likewise proposed a similar border tax system. And European officials say the tariff would be key for shoring up efforts to combat the climate crisis. The E.U. is one of the largest players in international trade, along with China and the U.S. The deal was reached after all-night negotiations among European national governments and the European Parliament, capping off a year of talks. The plan is slated for adoption in the next few weeks, along with a larger legislative package aimed at slashing planet-warming pollution. How it works : Companies importing products such as cement, steel, iron, fertilizer and hydrogen would be required to buy certificates to cover all the carbon dioxide emissions associated with those goods, such as their production and transportation. Notably, the provision includes indirect emissions, or the carbon pollution from the electricity used to manufacture the imported goods. The bulk of emissions from certain goods, such as aluminum, comes from the huge amounts of electricity used in production. The tax comes amid heightened trade tensions between Europe and the U.S. after the passage of the Inflation Reduction Act, which offers generous tax credits for electric vehicles made in the U.S. and free-trade allies. European leaders have argued that the boon unfairly disadvantages the continent's manufacturers.   It's Tuesday — thank you for tuning in to POLITICO's Power Switch. I'm your host,  Arianna Skibell.  Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to  askibell@eenews.net. Listen to today's POLITICO Energy podcast Today in POLITICO Energy's podcast: Marie French breaks down New York's partial ban on cryptocurrency mining and what it means for the state, environmentalists and the industry overall. Inflation Reduction Act Drinking water and wastewater systems are angling for Inflation Reduction Act funds. | SHTTEFAN/Unsplash Operators of the nation's power-hungry water and wastewater systems are eager to dip into a fledgling $27 billion program taking shape under the Democrats' climate spending bill, the Inflation Reduction Act, write Hannah Northey and Jean Chemnick. They're now calling on EPA to make crystal clear they can apply for money in the Greenhouse Gas Reduction Fund.   A message from Chevron: At Chevron, we're working to help progress the energy sector forward. Subscribe to The Human Energy Newsletter to receive our recently published methane report, energy news, powerful insights, and the latest on our efforts to bring affordable, reliable, ever-cleaner energy to the world.   Power Centers Secretary of Energy Jennifer Granholm announces a breakthrough in fusion research. | J. Scott Applewhite/AP Photo Fusion breakthrough Energy Secretary Jennifer Granholm formally announced a major scientific milestone in fusion energy technology today, after the news broke earlier this week, writes Ben Lefebvre. After decades of trying, DOE scientists produced a fusion reaction that generated more energy than it consumed. "It's the first time it's ever been done at a laboratory. Simply put, this is one of the most impressive scientific feats in the 21st century," Granholm said in a capacity-filled auditorium at the Department of Energy's headquarters in Washington. The moderate path New Mexico Democratic Rep.-elect Gabe Vasquez said that when he showed up on Capitol Hill for new member orientation last month, people went up to him and said, "Wow! We didn't think you were going to pull it [off]!" writes Kelsey Brugger. The incoming congressman for New Mexico's 2nd District was one of only three incoming Democrats to beat a Republican incumbent. Some see his rise as evidence of the state oil industry's decline. Hydrogen push Many of the world's largest energy companies and a Bill Gates-led group are joining an industry-led initiative to measure and map the emissions footprint of "clean" hydrogen, writes David Iaconangelo. The Inflation Reduction Act established the first-ever production tax credits for lower-carbon hydrogen, lifting expectations among investors and advocates of the fuel.   A message from Chevron:   in other news Shafts of sunlight beam down from behind clouds. | Carl Court/Getty Images Clouds. Friend or foe? One of climate change's great mysteries is finally being solved. Map it: The climate impact of your neighborhood, mapped.   A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We're kicking off with a series exploring darknet marketplaces, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY .     Subscriber Zone A showcase of some of our best subscriber content. A rancher uses a pump to encourage better water from a well in Tomales, Calif. | Justin Sullivan/Getty Images A record number of water wells in California have gone dry as climate change amplifies heat and drought in the parched state. The average fuel economy of 2021 model vehicles sold in the U.S. remained flat, while emissions dipped slightly that year. Trade disputes and supply chain issues will cause solar installations to decline by almost a quarter this year compared with 2021. That's it for today, folks! Thanks for reading.   A message from Chevron: From news and updates on Chevron's renewable fuel projects to the latest energy reports, The Human Energy Newsletter will keep you better informed on the entire energy sector. Subscribe to the newsletter and be the first to receive news and updates directly to your inbox. Subscribe now.     POLITICO AT CES 2023 : We are bringing a special edition of our Digital Future Daily newsletter to Las Vegas to cover CES 2023. The newsletter will take you inside the largest and most influential technology event on the planet, featuring every major and emerging industry in the technology ecosystem gathered in one place. The newsletter runs from Jan. 5-7 and will focus on the public policy related aspects of the event. Sign up today to receive exclusive coverage of CES 2023.       Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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