This position paper was submitted to the European Commission in response to a consultation call on the Carbon Border Adjustment Mechanism, which is intended to reduce the risk of carbon leakage (the ‘outsourcing’ by companies of their greenhouse gas emissions to countries outside the EU).
1. A ‘climate club’ of nations should be formed. Its initial members would include the EU27, a bloc of low-income non-EU countries of similar total population to the EU, and other countries which are willing and able to meet the terms required for joining the club.
2. All members of this climate club would participate in an extended ‘upstream’ Emissions Trading Scheme, which would impose a reducing cap on fossil fuels at the point of extraction or import.
3. Revenues from fossil fuel permit sales to fossil fuel producers or importers would be distributed between residents of climate club member nations on a per-capita basis.
4. Imports of products to the EU and other climate club members from non-member countries would be subject to a tariff-based ‘downstream’ CBAM.
Note: a corrected version of this submission was uploaded on June 29 2021. It streamlines the references to the climate club.
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