IThe European Union (EU) is to be commended for its continued efforts to take responsibility for its contribution to the climate crisis and for its search for innovative policies to combat climate change.
However, a just climate transition on a global scale must ensure that the progress made by a community on climate change does not translate into development losses for countries that contributed little to the climate crisis in the first place.
While far from perfect, the EU’s investments in low-carbon growth through the European Investment Bank (ECB), its private sector regulations and its New Deal green are all important advances that far outstrip the efforts of many other large historical carbon emitters.
Welfare losses
The latest addition to the EU’s climate toolkit is a very innovative Carbon Border Adjustment Mechanism (MACF). According to the EU, the MACF aims to “to avoid neutralizing the EU’s efforts to reduce greenhouse gas emissions by imports of products manufactured in third countries, where climate change policies are less ambitious than in the European Union. It will also help prevent relocation of production or import of carbon-intensive products”.
As the second largest contributor to historic carbon emissions, it is important that the EU is among the first to take the lead on climate change. Linking a MACF to the EU Emissions Trading Scheme and other regulations is an important part of the growing family of measures that will be needed for the EU to be at the forefront of climate action.
However, the EU also has a responsibility to tackle the “negative effects of the transition” which may arise from the MACF. In our new study, carried out as part of the Task Force on Climate, Development and the International Monetary Fund, we find that countries dependent on carbon-intensive exports to the EU will be disproportionately affected by the MACF.
Welfare losses in developing countries like Ukraine, Egypt, Mozambique and Turkey are between $1 billion and $5 billion [entre environ 935 millions et 4,7 milliards d’euros], which is considerable compared to their gross domestic product (GDP). Mozambique’s economy would contract by 2.5% due to lower demand.
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