EU-Proposed Carbon Tax to Backfire on European Businesses - Russian Economy Ministry

MOSCOW (Pakistan Point News / Sputnik - 27th August, 2020) The European Union's plan to put a carbon duty on imports of certain goods from outside the block risks hurting European businesses as well, Ekaterina Mayorova, the director for trade negotiations at the Russian Ministry of Economic Development, told Sputnik on Thursday.

The EU is planning to introduce the border carbon tax on certain imports through the so-called Carbon Border Adjustment Mechanism (CBAM) as part of its aspiration to go climate neutral by 2050. On Wednesday, Russian Security Council Deputy Chairman Dmitry Medvedev slammed the plan as "hidden protectionism disguised by a noble cause" whose aim is to prevent Russian goods, primarily gas, from reaching the European market. His concerns are shared by a number of other non-EU states.

"The EU is one of the largest markets in the world. The economies of almost all countries are not at their best due to COVID. One of the reasons why many in the West are giving up the tough quarantine measures is because the risks associated with an economic crisis might be higher for the population than the risks associated with the disease itself. After all, the EU tax will not go painless neither for the companies of EU countries nor for the companies of their trading partners," Mayorova said.

While the European Commission has yet to name the goods that will fall under the carbon border tax mechanism, the Russian official said many other factors other than the production cost of a certain product itself must be taken into account if Brussels' aims are in fact environment-focused.

"If the mechanism is designed not as a protectionist tool and genuinely pursues to reduce greenhouse gas emissions, then its application must obviously consider a variety of factors. For example, almost half of Russia's territory is covered with forest. Our country accounts for 20 percent of the world's cumulative forest area. So our country makes a significant contribution to the global absorption of carbon dioxide, evidently partly produced by the EU economy. We don't charge foreign companies for that, even though our taxpayers pay considerable sums to maintain forests," Mayorova said.

The EU leadership has claimed that the new mechanism will ensure fair competition among the domestic producers, who will be bound by high climate standards of production, and foreign producers from countries with "less ambitious climate policies," for whom the production costs much less due to cheaper, but less environmentally-friendly technologies.

The EU is expected to make the final decision on the carbon border tax by mid-2021.