Climate tax on imports to split commissioners

European commissioners are set to clash over plans for an import tax on products from energy-intensive industries aimed at cutting greenhouse gas emissions.

A Commission paper on climate change, prepared by the transport and energy department, advocates a "border carbon levy that would put imported products on a competitive footing identical to that of domestically produced goods".

This could affect large exporting countries such as China and the US, which are not subject to the same carbon dioxide (CO2) emission reduction targets as the EU.

The paper will be discussed by the College of commissioners on 10 January as part of the Commission's energy review.

The communication on long-term climate change policy options calls on the EU to look at "all possible ways of reducing greenhouse gas emissions".

The draft warns that any levy adopted would have to be compatible with World Trade Organization (WTO) rules and should not restrict international trade.
The idea of a levy was floated in a discussion paper prepared by the Commission's enterprise department in the early autumn and has now been picked up and promoted in the climate change paper.

The "most likely" solution, it suggests, would be to impose a border levy system on "the industrial sectors which are both heavy emitters and subject to international competition (eg, aluminium, iron and steel, cement, refineries, pulp and paper)".

A Commission official said the levy idea was only a suggestion and the Commission intended to look at the pros and cons before publishing any concrete recommendations to follow the communication.

The Commission is now studying the compatibility of a border carbon levy with WTO rules. Environment Commissioner Stavros Dimas called for a decision "without delay".

The Commission's plan falls short of a French call to tax all imports from countries which do not face CO2 reduction targets under the Kyoto Protocol.

Trade Commissioner Peter Mandelson this week warned that a French-style carbon tax would undermine international climate change co-operation and run into WTO problems. His spokesman said the trade chief was also likely to oppose a sector-specific border levy of the sort suggested in the communication.
"Legally we have to watch out for any discriminatory border taxation... and Mr Mandelson's essential message is that the politics of punitive measures gets the climate change message wrong. It will not encourage the necessary co-operation from our trade partners."

Enterprise Commissioner G