Azara Blog: EU carbon plans could transfer jobs to outside EU

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Date published: 2008/01/15

The BBC says:

Trade unions and business leaders say EU plans to cut carbon emissions could harm European jobs and industry.

The European Trade Union Confederation fears up to 50,000 steelworkers' jobs could go if their industry moves to areas with lower costs for polluters.

And lobby group BusinessEurope says companies will lose competitiveness if they are forced to buy all their rights to emit carbon dioxide.

The European Commission's proposals will be revealed next week.

But the aim of the new rules on fighting climate change is clear.

It is to reduce carbon emissions by 20% by 2020, by increasing the use of renewable energy and revamping the EU's emissions trading scheme (ETS).

Launched in 2005, the scheme has been criticised for allowing big polluters free carbon credits.

Companies are set CO2 limits and then buy or sell permits if they miss or beat their targets.

It is thought the commission will now try to reduce the number of free credits substantially, requiring industry to buy most of them at auction.

BusinessEurope's Secretary General Philippe de Buck has written to commission president Jose Manuel Barroso, warning that "the competitiveness of European companies" will be harmed by the auctioning of allowances and "exacerbated" by increasing electricity prices.

Trade unions are concerned that a new permits system would force heavy industry to move operations out of the EU, to neighbouring countries such as Turkey, Ukraine and Russia.

"What we don't want is for companies to fire people in Europe and relocate to cheaper, dirtier locations," says European Trade Union Confederation General Secretary John Monks.

Unions fear such a change could lead to 50,000 of the steel industry's 350,000 jobs being lost.

Mr Monk's solution is for a carbon tax on imports from countries that are not trying to cut CO2 emissions.

He believes that such a tax would "equalise carbon costs", although he accepts that it might fall foul of World Trade Organization rules.

Monk, unbelievably, is just about correct. The problem with the EU, and indeed the current international community, view of carbon emissions is that it looks at where goods are produced rather than where they are consumed. So the EU claim that it will "reduce carbon emissions by 20% by 2020" is mostly nonsense, instead what will happen is that much of the emissions will be exported to other countries. Of course this (bogus) strategy only works as long as the EU can produce lower carbon goods of equal value, for export. And when the strategy stops working (as it eventually will) it means that the citizens of the EU will become poorer, unless the rest of the world has meanwhile introduced similar carbon taxes. Of course there are many in the EU ruling elite (including the so-called environmentalists) who probably want the citizens of the EU to become poorer. (They think that the peasants are far too rich and consume far too much.)

The real problem with Monk's proposal is that it is difficult to calculate a proper carbon tax on imports, since most goods are of mixed origin. What the world really needs is a global carbon tax on carbon at source, because then the cost will be passed onto the people who should really be paying it, i.e. the consumer of the goods.

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