BRUSSELS, Oct 8 (Reuters) - The EU will start work immediately on a tax on polluting foreign firms in an effort to shelter EU businesses striving to meet a goal of becoming climate neutral by 2050, the senior official who will be responsible for climate issues in the new European Commission said on Tuesday.
Frans Timmermans, who was speaking at a confirmation hearing in the European Parliament, will be the commissioner overseeing the European Green Deal, the signature climate and environmental policy package, in the executive that takes office on Nov. 1.
A major part of that Green Deal, the carbon tax is meant to shield European companies from competitors based in countries where climate protection schemes are less strict.
“We should also be prepared to consider other instruments, for instance a carbon border tax, to level the playing field for European products if other countries do not go as far as us, or refuse to go in the right direction,” Timmermans said in his opening statement to EU lawmakers.
Some energy-intensive European companies have voiced support for the carbon border tax to help them tackle competition from non-EU companies faced with laxer environmental laws and therefore cheaper production costs, but they have also said everything will depend on the design of new regulations and they would take years to agree and implement.
Steel giant ArcelorMittal Europe has been the first to speak out.
“A carbon border adjustment is an effective and fair way to ensure every country plays its part in reducing global CO2 emissions,” ArcelorMittal Europe Flat CEO Geert Van Poelvoorde said in an emailed statement on Tuesday.
Otherwise, he said, European steelmakers would be unable to compete and carbon emissions would be shifted to parts of the world where production is cheaper, a phenomenon known as carbon leakage.
European steel association Eurofer says the steel sector is the most exposed to carbon leakage among all energy intensive industries.
“Moving steel production to countries where carbon emissions legislation is less strict, and where carbon emissions are therefore higher, means efforts to combat climate change would amount to very little,” he said.
Last week the nominee for the EU’s economic and tax commissioner, Italy’s Paolo Gentiloni, said that the EU “will try to be very quick and effective on a carbon border tax”.
Both Gentiloni and Timmermans have flagged that there are many legal and technical hurdles to making the carbon border tax compatible with World Trade Organization rules, but they are hopeful that the EU will come up with a plan to convince the Geneva-based organization.
“I will immediately intensify our work on the analysis to allow us to identify the model which is the best suited to our needs,” Timmermans said in a written testimony ahead of his hearing.
Both Timmermans, a Dutchman, and Gentiloni are part of the new European Commission, which, if approved by lawmakers in the European Parliament, will take office from November 1. (Reporting by Jonas Ekblom Editing by Gareth Jones)