G7 pledges to cooperate on carbon leakage as EU tariffs loom

By Kate Abnett

BRUSSELS (Reuters) – Group of Seven leaders on Sunday pledged to work together to tackle carbon leakage, weeks before the European Union proposed a first global plan to impose CO2 emission costs on imports of certain polluting products.

As large emitters such as the EU grapple with how to meet targets for drastic and rapid reductions in CO2 emissions, concerns grow about alleged carbon leakage – the risk that stringent climate policies will force companies to relocate. in areas where they can continue to pollute. cheap.

“We (…) recognize the risk of carbon leakage and will work collaboratively to address this risk and align our business practices with our commitments under the Paris Agreement,” G7 leaders said on Sunday. in a joint press release.

The leaders said policies to put a price on CO2 would help them decarbonize their economies.

They have avoided mentioning carbon charges at borders, however – an idea that should take center stage next month, when the EU comes up with its long-awaited plan to force importers to pay for their emissions.

A draft EU policy would force importers of iron and steel, aluminum, cement, fertilizer and electricity to purchase digital certificates to move their goods across the border from the United States. ‘EU. Each certificate would represent a tonne of CO2 emissions incorporated into the goods.

“Carbon pricing is important. We need to tackle carbon leakage to create (a) a level playing field globally,” European Council President Charles Michel said in a tweet after the G7 meeting.

Brussels says this policy is necessary to put EU companies on an equal footing with their competitors in countries with weaker climate policies.

However, it has aroused opposition from countries including Russia, for whom it could make access to the EU market more expensive for certain products.

It could also affect some members of the G7. The draft proposal would apply to certain products that Britain and the United States sell in Europe, including steel and fertilizers.

Brussels said countries with sufficiently ambitious climate policies might be able to dodge the charges.

(Reporting by Kate Abnett and Elizabeth Piper; Editing by Elaine Hardcastle)

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