[Music]
[Applause]
[Music]
ladies and gentlemen
please welcome the moderator of the one
of the last sessions at the habsburg
stage
steve clemons
hey everyone i'm steve clemons it's a
pleasure to be with you i'm editor
at large of the hill in washington d.c
uh i see we've got a couple of our
panelists online it's great to see you
uh and we've got people here who i think
you must be the most obsessed people at
globesec
with carbon taxes so great to have you
here
let me tell you what we're going to be
discussing we're going to be talking
about eu climate diplomacy leadership
and the carbon border tax we may
actually broaden this a little up
because we've got glasgow coming up in
new november
uh there's a lot going on both in the
transatlantic relationship
uh but but globally within this realm
and the topic that we're going to be
discussing today and we have people who
understand the technical dimensions but
they also are able to lift up to the big
political and geopolitical dimensions of
this um
and we have three wonderful things with
me on stage here in person
it's my first in-person first interview
here at globe cycle all my others have
been online but
great to have with me uh here christian
engenhofer is the senior research
associate
at the school of transnational
governments at european university
institute in florence
and he's also associate senior research
fellow at sepps in brussels
so great to have christian with me but
jennifer hillman my colleague and friend
from washington d.c
we were online together just the other
day for the calorama conversation
where we discussed exactly this topic
with pascal amy the former director
general of the
world trade organization and senator
sheldon whitehouse and jennifer pones
from the jacques de lore institute and
jennifer we didn't get to talk that day
but i actually called when we were when
we were online i said
jennifer hillman will know the answer to
this question and then you had already
slipped off but it's great to have you
uh here with us and then of course we
have pascal uh uh
uh pascal confines chair of the
committee on environment public health
and food safety
in the european parliament he's just
finished a meeting pascal thank you so
much for running out of that meeting to
join us here
and help us set the stage uh on this
topic what i'd
just like to say for a moment and and
this doesn't have to be where the
conversation goes
each of you can ask questions here in
the room those of you who have the globe
sec app
can ask questions online and they will
be fed to me up here and i hope you will
do that i know we have
uh some viewers on zoom as well but let
me just you know say at the beginning
that the reason
that i had the opportunity to help
moderate a discussion
previously with people who are real
experts in this topic i should say i'm
not
i can ask the lay question and the silly
question hopefully some informed
questions
but when we had jennifer hillman and
many other colleagues in the
transatlantic relationship online
a couple of weeks ago discussing uh the
the
uh carbon border tax with regard to this
there is a concern i'm just going to put
on the table
that europe is evolving in one direction
and the united states and other
countries is evolving in another
direction
and that the lack of coordination the
lack of alignment
even though they most may have carbon
goals creates real complexities and
problems in transnational firms and
companies and regions
and so i wanted to say just on the
outset that that's one of my real
interests
is it's something i hadn't considered
but as we talk about greater goals and
carbon goals
as we get to glasgow in november that
this lack of alignment was something at
least pascal lamy underlined
as a serious concern from his
perspective so
let me ask uh another pascal of course
chairman pascal
uh uh uh convene to to join and and help
set the stage
for what you see is the dashboard of
concern as you look at uh
adjustable carbon taxes border taxes uh
in this realm
pascal yeah so uh
thank you for giving me the opportunity
to
to share uh our thinking uh in europe
about it so uh first
it will not be a tax it will be
uh the mirror of the european trading
scheme
so if the european carbon price is of
52 one day
the eta the the the carbon border
adjustment
will be 52 the very same day
if it's 40 carbon border adjustment will
be 40
okay it will be mirroring the price
paid in the eu second
it will be the exact mirror on the
volume as well meaning that if
part of the carbon is not paid by
european industry because they still
receive
free allocations for part of their
emission then of course
we will apply the very same scope for
imports that give you
uh two examples of the way we want to
design
the carbon border adjustment mechanism
that will be legally presented
formally by the european commission the
14th of july so in
exactly one month's time we want to have
it
wto compatible that's a red line we do
not want to enter into a trade war on
climate with our partners
it's a no-go for us but the other no
goal
for us is that we would have a price of
carbon
with of 50 60 maybe 70 to 80
we are as already more than 50 today
that will be applied to our industries
and then importers will play zero
zero on carbon and then that would just
put out of the market
our own industry so it's politically
unacceptable uh for jobs reason and
acceptable
and for climate reason that would be
completely counterproductive and if
ineffective because that would mean that
that would be a huge incentive
for not going green so that's why
we need as we enter into a new era
of carbon pricing in europe in the past
the carbon price was
let's say 10 15 20 euros bottle you do
not change anything with this
now we are at 50 we will probably very
soon
go up to 60 and later on to 80.
at that level of price for some
industries
you cannot uh stay on the market
with competitors paying zero right so
that's the basic equation
so i put there all the key elements that
will drive
our proposal that will be made
in the couple of weeks time and again in
a very cooperative way with our partners
we do not want to
be in a trade war we do want to be
within the space of wto
if it is within the space of the wto and
we know how to do it
then it is within the rules we all
agreed
so that's why uh i don't think it's a
i don't think the the carbon border just
mechanism as a non-comparative mechanism
but just as an equitable mechanism to
make sure that we can move forward the
climate agenda
without jeopardizing our industrial
competitiveness
we have uh uh jennifer hillman as i
mentioned the council on foreign
relations we've got chris you're going
to come in but i want to ask you one
question pascal before we move to
jennifer
is is the question of you're not a
bureaucrat you're a politician you chair
a committee
you i'm just interested you know just
given my own washington orientation
is there kind of a strong robust
consensus on your committee that this is
you know all packed up and ready to go
or are there any elements of controversy
and and you know difference of opinion
as you see it
in this area what are the political
fault lines that you deal with
now there is a wide majority a very wide
majority behind what i see
behind what i supporting what i said
meaning
it has to be fair equitable wto
compatible
and if i take the u.s specific case
if there is no carbon price in the u.s
for domestic reasons
then we have to make sure as europeans
that we take the implicit price of
carbon carbon
so the explicit price on carbon is
either through markets or through taxes
but you can have implicit price on
carbon through standards
if you put a standard on cars or
standard or aluminium and so on you have
an implicit price on
on carbon and then it would be
fair to have that in the design
of the carbon border adjustment
mechanism so that if the us
put a standard on a certain sector
a certain commodity
without putting a price we translate
the standard into the equivalent of a
price
so that we do not double
price the carbon from the u.s because
that would be unfair
from us to you so that's why when i say
all of that
be behind this you have a very very
strong majority
uh across the board to support this idea
well thank you
well let me bring in jennifer hillman
and jennifer hillman is the senior
uh fellow for trade and international
political economies i said at the
council on foreign relations
but more importantly she has been a
trade official of the united states
the international trade commission the
u.s trade representative office
in the worked in the wto jennifer
probably knows more about trade
uh than anyone else at globe sec i think
but on this cut area but when it comes
to these alignment areas
uh jennifer about you know what we just
heard from pascal on this subject today
do you share what pascal amy put on the
table that
he he worries that there's a lack of
alignment geopolitically
and since you have a foot on so many
different dimensions
of this question and you just heard uh
pascal's comment on on what we need to
do
um i'd love to get your sense of whether
united states is anywhere near
that level of sophistication and
approaching you know uh
a price on carbon well first of all
thank you very much it's an honor to be
here and i will say i
i share if you will both pascal's views
i mean on the one hand i agree with
pascal amy that there is
a high risk uh that what the european
union is doing could
create tensions uh with the united
states and with others and i would say
maybe even more particularly with
developing countries who are going to
see this as falling very
very heavily on them and at the same
time i i want to agree
with pascal confident that i think the
european union has done
a very commendable job of working to
make sure that this proposal is
is fair and is wto compatible
the devil is going to be in the details
i mean the issues that were raised right
here at the end this issue where
in the united states right now uh with
the exception of our emissions trading
system in california and a few other
sort of smaller regional arrangements
where the way in which the united states
is getting down
its carbon emissions is entirely through
regulatory mechanisms
uh both through you know again certain
specific regulations with respect to how
power is generated
uh with regulations on emissions
controls on on gasoline fuels and
everything else
as well as incentives for the investment
in renewables
that is very different than a carbon tax
or an emissions trading system and so
and what becomes very tricky is if the
european union
imposes a a a charge
in the form of requiring u.s exporters
to buy
european emissions trading certificates
um
is that price in essence a fair one is
it equivalent to what the european
industries are paying
and is there a fair way to say oh but i
effectively paid at home in the united
states
because of the way in which my industry
is regulated
and and that's where the the rubs could
come
um and again i share pascal amy's real
concern that the
goal on both sides of the atlantic is
exactly the same
to get to net zero i'm going to
interrupt jennifer let me let me just
ask so that i understand again
i'm a layperson we have laypeople in the
audience we also have a couple of these
young folks that are real experts i
think
but are you basically saying that
american firm that has generated
whatever widgets they're producing
in that regulatory order may complain
that they're being double
taxed is that what you're you were
correct correct
you know again and and again i want to
commend the european commission and the
european union for trying to figure this
out
and again it remains to be seen the good
news for everybody is they're starting
slow
there's only four industries that are
you know in there in the very beginning
of this phase
you know and we're going to see kind of
how it goes so we've got steel
cement electricity fertilizer and iron
are the ones that are sort of out there
at the beginning
uh but that's exactly the concern is
that a u.s
exporter of steel is going to get
charged you know
they're gonna be told you have to pay
you have to buy uh
emissions uh certificates and the price
of those is
x um and they're gonna argue that that's
not fair
uh that some that the uh that the you
know european steel industry got a free
allowance so they didn't actually have
to pay as much
that will be one argument they're gonna
make they're gonna argue wait a minute
wait a minute here i'm highly regulated
in the united states in the following
six ways
so i have effectively paid a carbon
price already in the united states and
you aren't
fairly recognizing it that's going to be
the argument from
from u.s exporters that are trying to
get their product in
into the eu and again it remains to be
seen whether they have a good argument
or not i can see pascal about jumping
out of his chair like saying you know
just waiting to wrestle
uh you know those people complaining
down but we've got christian here
christian i think and i'm trying to
understand the technical dimensions of
this somewhat
of a tax that sort of has a ledger where
you've got you know inputs outputs and
they sort of
equal each other but i guess i'm used to
thinking about you know the whole reason
you put this in place is you're trying
to create winners and losers
right you're winners and losers within
the political economy and you try to
create winners that are going to be more
uh uh environmentally sustainable
practices versus losers that aren't or
that pay for that so
i'm interested in what you see as the
impacts
of this kind of tax on getting to a more
sustainable world if you will but also
is the ledger really that balanced is
there not revenue
made are there not offsets that we
should be talking about yeah i mean
you heard it and i i you heard the
concerns and i'm just wondering hearing
this
whether we are not creating a
administrative monster with all these
complications devil is in the detail and
as we go
there are more devils and more details
for achieving what you mentioned
we looked at in the european university
institute we looked at
cement just to do some back of the
envelope calculations
and you see that north africa
carbon intensity is lower than in europe
and if even in ukraine is much higher
but actually the differences between the
europeans
and the and the non-europeans
that's cement is traded in europe mainly
is not that big
so the question for mir is what are we
achieving with this
and getting uh to your question we
put out 10 years ago so we have some
good credentials for carbon border
attacks we put out 10 years ago a book
and arguing for it
but i think by now the time has has
changed we have now the paris agreement
where we have one
agreement of which everybody is part and
what i think the big question for the
future is
how do we incentivize this investment
into the low carbon the green steel
into the green sea green cement green
chemicals and so on and so on so that's
the big questions
i'm a bit worried we are protecting
uh the old industries uh too much and
that's
why my question to uh monsieur garfield
is you know why
do we keep the free allocation why
don't we go over take the free
allocation away because
then the devils the details are much
smaller
and will be much much more easy and you
know
we have a lot of money in the free
allocation we did some calculations
using eu numbers commission numbers
and we talked about free allocation
at the level of 350 billion
in the next nine years that's half the
recovery package
now why do we keep this and that's i
think is a question
for me to mr kraft and maybe jennifer
certainly has
something to say mr chairman what is
what are your thoughts pascal
well you know i'm definitely not in
favor
of keeping the free alliances so i'm
exactly on the same line than the
christian the commission the european
commission will make the formal proposal
we will see what it will be
but of course keeping freezing i would
say
uh uh the free allocation system as it
is today
would be uh completely counterproductive
for the very exact reason that was
mentioned by christian
uh back to what jennifer said i mean you
raised two
potential concerns and i
try to answer and to anticipate this
concern
because we do have the same and we do
want to be wto compatible
so meaning that if you have
free allowances which we shouldn't have
back to what has just said and what
christian said but if ever
we have free allowances still in the
system
of course of course the cbam
will have to incorporate this and to
make requirements for the u.s steel
makers
only on the scope of what is really
effectively paid
by the european seed makers so no doubt
about it
no issue second explicit versus implicit
price
you're right and as i said if there is a
regulation in the u.s
that leads to the greening of the
steel production in the u.s
and that you can demonstrate that it is
equivalent
to the eu system critical price on steel
no issue and then there will be no sebam
so again
i mean we are working on it so let's not
create
uh just a bad buzz about it because we
shared
exactly the same vision but you have to
understand
the starting point the starting point is
that
we cannot ask our industries
to pay 50 60 70
80 euros per turn of co2 and being
competed
by companies being either zero or
having no standard so that's why with
the us
we should be able to find the agreement
based exactly on the current discussion
but with china there will be no standard
and a price of let's say one or two
dollars
and christian was right to say that okay
we have all
uh signed the paris agreement but let's
face reality
we are not all implementing the paris
agreement at least at the same pace
so i can't see how come i can go to the
european
uh uh
sorry as workers in the seed industry in
the fertilizer industry in the
electricity industry and so on and so on
i say okay
you're going to get fired because there
is no
uh equity a fair competition between you
china and the u.s
i cannot do that and politically
speaking no
political leader in the eu will do so
that's why
there is a wide political backing of the
sebam
designed exactly as i just mentioned
let me ask a political question of
jennifer so i have uh
spent a lot of time recently with a
controversial u.s senator at the moment
he's sort of
you know the the senator that everybody
wants to to have to dinner senator joe
manchin
and senator manchin in the united states
is from a state called west virginia
west virginia is a major coal state a
coal producing state
and i'm just interested jennifer in
if we were to take the european model uh
that we're talking about this border
adjustable
you know tax and we had that kind of
application
in the united states what would happen
to west virginia because what i'm
interested i'd also like to bring into
this discussion
as we go back to that question you just
mentioned china
and we have dissimilar countries also
you know committing themselves to
certain climate targets
and we have a kind of openness on how we
get there jennifer hillman co-authored a
paper i highly recommend to folks at the
council on foreign relations site on the
belton road
uh china's belt and road initiative goes
into a lot of these issues
very worthwhile talking but i'm
interested in how
particularly in the united states
jennifer you help transitions
how do you fund transitions of people's
lives you know the work they do
you know pascal just talked about this
so i don't think america solves this
with the power of a joe manchin until we
begin answering that question
and i'm wondering what your thoughts are
well again i i think the us has taken a
lot of different
approaches to the whole panoply of what
you're raising in your question
i mean one is what are we going to do on
on regulating carbon and
and as you know years ago there was a
you know fairly serious proposals in the
senate
for the united states to establish an
emissions trading system somewhat
similar to the european union system
where we would
auction off um permits to continue to
emit and this would have been something
that the coal producers would have had
to do they would have had to purchase a
fair amount
of emissions certificates and we would
have had a trading system
that went through part way but never got
completely enacted
then the shift was to go to a carbon tax
in the united states and there are still
many proposals out there that may get
support
uh to enact a carbon tax in the united
states again that tax would fall
most heavily on coal producers and
others because of the amount of carbon
that is embedded in what they do
uh and the issue is then what would the
united states then do
in response to try to help those coal
producers but your question
also raises just in general what do we
do for
any american workers that are impacted
by trade you know by imports coming in
that they have to compete with
or broadly and there i think there is a
huge
recognition that we have not done well i
mean we have simply not done
enough to try to figure out how to
transition both
the individual workers and the
communities that are heavily impacted
whether it's heavily impacted by imports
or whether it's heavily impacted by a
new carbon
system we have got to do better than
what we've done what we've done so far
is limited so-called trade adjustment
assistance
that if you can prove that you lost your
job as a result of trade
you can get limited amounts we've seen
now with covid a huge move to expand the
amount of unemployment insurance
benefits
and others but this is going to have to
be part of a broader package
whatever adoption the united states does
for carbon adjustments it is going to
have to include
a significant amount of worker training
uh programs
it's going to have to include investment
in the renewable energy so i mean what
clearly the biden plan is is to
encourage those coal workers to now
become
solar workers or wind workers or those
involved in the production of renewable
energy instead of
being involved in the production of coal
and obviously
there's a lot of work that needs to be
done in order to make those transition
realistic and possible thank you for
that i want to remind everyone that you
can ask questions on
any element of climate or you can ask a
tax
uh obsessed question too because we've
got real tax experts here
on your app or we'll we'll bring people
up here uh in just a little bit
but let me ask you know go to christian
and all of you you know on this kind of
broader question
of how you transition economies and i'm
just intrigued with what
what pascal has a uh what i would call
an elegant
and fascinating construct to look at
something
and i'm always interested if europe were
able to achieve that and put that in
place
does that create uh uh you know that
sophistication that ability that ease of
managing
you know carbons and creating pressures
in the right place
does that create a competitive advantage
long run for its industry and states
versus china versus india
versus the united states that have
uneven
uh deals there so do you i mean i'm just
sort of looking at this as something
that could be
uh does it create for europe certain
competitive advantages
that the rest of the world won't enjoy
because it's just behind you
um christian you know i have my serious
doubts and
you know sorry pascal have to come back
to the free allocation and i fully
understand that's part of the deal
uh to get this done but if you look at
the the current system
we are giving the free allocation to our
existing installations
and if you're going down the route of
green steel
for the audience free allocation
protects incumbents right
yes that that you know protects the
existing installation because they have
a carbon cost
and some other way to seduce the men yes
okay
yeah i mean the bribe you know which we
did in 2000 i didn't want to say the
word bribe
but you know yeah you know i'm european
i can't say that
um so you know so what is happening now
is that we are subsidizing or
you know supporting existing
installations for all the reasons which
just jennifer has
explained but once you go down the route
of investing in low carbon cement in low
carbon steel
you don't get this reallocation huh and
that is for me the main concerns if we
want to be competitive in 2030
we need a low carb steel low carbon
cement so how do we
bridge that gap supporting the old
industries
and don't give the same support or
the support to the new industries and in
fact we don't know what these new
industries will be
will still be substituted by plastics
will we have more as recycled steel will
be using more
wood and all this steel gets the
allocation wood doesn't
so that's will be a big challenge for us
to be
competitive in this 2030 perspective and
beyond let's jump back to pascal
and say am i right off i mean respond to
christian as you will but also
answer my question whether the regime
you're building
actually creates a long-term competitive
advantage for those
industries in it in contrast to the u.s
side which just
as jennifer pointed out is so uneven i
mean i mean i talk to ceos
all the time in the united states and
they are either working around
government issues or i talk to the ceo
of occidental via they're going to build
the biggest carbon capture
site but that's going to be a function
of government subsidies so you create a
lot of unevenness there that's why
i'm interested in the in the elegance of
the plan that you're putting forward and
talking about
and i'm just wondering in the long run
whether that also creates strategic
economic advantages
well so it's our conviction and then of
course i'm not talking
only about siberman talking about the
whole the whole thing
uh what we call uh in the european
context the green deal
so i know that in the u.s uh the the the
term
is is uh isn't it's not mainstream but
in the eu it is mainstream where
everybody talks about the green deal
and the green deal means that we are
going to change
more than 50 five zero 50 lows
european lows from now on up to
the end of 2022 and on
the 14th of july the commission will
propose the change of
13 1 three lows out of this 50
and one of them is the sebam another one
is the reform of the carbon market and
so on and so on
so that's massive that's unprecedented
and massive
and of course if we do so of course the
number one reason is climate it's
obvious
it's obvious and i don't have to
elaborate more on this but the second
reason
is that it is not only our duty to do so
but
it is our interest to do so it is in
our interest because uh there are
a few industrial challenges ahead of us
obviously the digital one obviously the
decarbonization of our economy and going
net zero by 2050
and the one the europeans
can win is the decarbonization one
the digital one we are still in the race
but to be honest let's face reality
again
it's mainly about the us and china
the decarbonization one we are leading
it
and the more we put standards in place
the more we've changed the rules of the
game
but again within the game of the
multilateralism
and the multilateral rules we set and we
agreed on
that's the dna of the eu and the
european mindset
the more economic gain we want to to
have
and the big difference so we are we with
the u.s at least today
it was not the case in the past but at
least today we are
100 aligned on what where we want to go
the only difference and it's a big
difference between the us and the eu
is that you are one of the uh
uh most of the largest
uh fossil exporter and producer
we are the largest fossil
importer we do not have any fossil in
europe
very small scale for gas no petrol no
oil and
a coal but we are committed to decrease
it exactly at the u.s right
we do not have shell guys and so on so
because you are an empty continent we
are a full continent with full of people
everywhere
right that's the big difference and
that's why
it is even more and maybe uh it would be
contested by the
by by jennifer but it's even more in our
economic interest as europeans
to go greener and to decarbonize because
we
when you look at the u.s china eu
the eu as a whole so germany plus france
presents and so on
we are the block having
the lead on green patterns on low carbon
licenses we are the leaders there right
right
then second china third ua right so
that's why we consider that it is
clearly our economic interest to get
there and to change progressively all
the set of the
of rules including carbon price
including sebam and so on and so on and
last point from my side very last one
is that the political maturity
in the eu of the debates of the
relationship between climate action and
trade
is now real it was not the case three
four years ago
now it's clearly part of the debate we
do want to have trade we do want to be
open we do want to be wto compatible we
do want to have additional trade
agreements and so on and so on but
we want to be consistent between our
trade policies
and our climate policies that's why we
for instance we are
probably not going to ratify the
mercosur agreement
because we cannot sign an agreement now
with bolsonaro doing what he does
on climate and on biodiversity with
amazonia
that's that's the core now of the dna of
the global vision of the eu and i hope
i hope that the us will be with us on
this well thank you for that i want to
go to jennifer hillman ask her to reach
deep down and find her inner trade
warrior
uh and and ask her you know as she looks
at the wto she looks at
uh companies here and as i'm listening
to pascal talk about what his
hopes are in compliance but you know
just in the way you talked about well if
you know
steel industry can show that it has
achieved equality here
it just sort of seems to be would go
back to what christian said you create
essentially machinery that needs to
that'll be
good business for waivers and you know
political calculations
and i'm just wondering and that leads
you to trade disputes jennifer is there
a way to do this
without just a mountain of trade
disputes
uh i think it's very hard to think about
doing it because again the the basic wto
rules are
you can only put a charge on at the
border a tariff if you will that is
sort of in your schedule and the
schedules don't allow
for this additional tariff to be charged
on imports because of carbon
so the only way that you can do this
fairly is to say that it is the
equivalent of whatever your domestic
industry is paying
so it is always going to require this
calculation of how much
does your domestic industry pay for
carbon
versus how much are you charging at the
border so it's hard to see how you
get out of that um you know sort of
mechanics of having to do that kind of a
calculation so uh
the concern that i would have again i i
commend the european union i think this
proposal has gone as far as they could
possibly go to trying to make sure
it is fundamentally consistent with
their wto obligations and
and for all of the reasons that pascal
has said the problem is there is going
to have to be
these detailed calculations and right
now the european proposal
sort of puts those off to sort of
private companies that would do this
evaluating of whether or not this is the
equivalent of that
in terms of how much the carbon uh you
know was was burned up in the production
of a particular ton of product
uh that is i think gonna lead to a
cottage industry of of those that are
doing these kind of evaluations
and again it gets back to the question
that christian raised you know at the
beginning
is this really worth all of these
details
and and again my own sense is um it may
be necessary as part of the transition
uh i think what the european union is
trying to do is to encourage everybody
to join this
you know an alternative a completely
different alternative would be to try to
create some kind of a carbon customs
union
where everybody that is doing anything
that is the equivalent of carbon pricing
sort of gets together and says we won't
charge any of these taxes on each other
we will only charge them on everybody
that's outside of the club
uh that would be an alternative uh that
would potentially avoid some of this
litigation
but again i'm gonna hope that everybody
is gonna hold off for a while in terms
of challenging what the european union
has done
because of how far they've gone to try
to make sure that they are
already wto compatible jennifer does
china have to be in this
somehow well china has to be in the mix
uh because if you look at what
is happening in china just a step back
from it if you look at who are the
largest producers of
solar of of uh of wind of geothermal of
hydro the
the biggest best companies in the
renewable space right now
are in china uh and yet what have they
done if you look at again the belt and
road initiative thank you very much
steve for commenting on it but if you
look at what they've done
in that bell road initiative they've
exported 260 coal-fired power plants
uh which are going to be up and running
for the next 35 years
largely used buying their coal from
china
and again it is making it much much
harder
to think about climate change so even if
china does
better within the chinese market itself
we have to take into account what china
is doing
externally and what they're doing
externally is
going in the absolute opposite direction
of of fighting climate change so i mean
a num
among the other things where i hope the
u.s and the eu can get together
is on some serious financing limits
to basically say no more financing of
coal-fired power plants whether it's
belt and road or anybody else we should
be saying just
no financing of of coal-fired power
plants
period well great well thank you we've
got questions coming in
i want to come back in a moment
christian understand this 350 billion
euro fund
i'm always interested where the pots of
money or we'll have to go back to that
but let's take your question here
and if you'll identify yourself and
we'll just all respond thank you thank
you
very much for taking my question my name
is slavomir hubatka i'm from technical
university
of koshita i want to ask about free
allocations for industry in europe
either you use steel industry
as an example you know in europe steel
industry is one of the biggest emitters
of co2 emissions and a little closer to
the mic
yeah in europe steel industry is one of
the biggest emitters of
co2 emissions and most of their cost of
emissions is covered by three locations
is there a plan for a transitional phase
in which the free allocations are
reduced to zero for example until the
year to
2030 or is this is
it's not there will be no transitional
phase or the allocation will drop to
zero suddenly from year to year right
and is there a possibility it will
create
uh industrial climate immigration
for example u.s lakoshitsa taking back
its
production back to back to america or
for example arthelomata are moving their
production into china right thank you
great christian do you want to address
it for a moment yeah i mean i probably
have a similar answer than uh
pascal you know we're having this big
package about ets review and all of
these points
will be reviewed at some uh you know at
some stage
or later certainly we'll have to think
about what we are going to do with these
200
350 billion free allocation which is a
big part of money to drive
exactly this uh decarbonization in in
the future and avoiding what you're
you've been mentioning but i would like
to pick up the the point
jennifer if i understood you uh
correctly you you see
you know i tend to agree with you that
the carbon border chestnut mechanism at
some stage we will
need you know five to seven years and
the question to maybe both of you you
know is wouldn't it be better now to use
this
very sophisticated proposal by the by
the commission i think everybody agrees
as a sleeping gun
to say look it's there we are trying to
be pr you have it now ready we will be
using it
unless you know yeah yeah
put the pressure and i think that was
the initial idea in
the eu legislation to put the pressure
as thick
to get let me ask jennifer to quickly
respond in them and ask christian to
respond to our our
questioner jennifer do you want to
respond to uh to uh
well again the question raises again one
one of those devil in the details is
this exact issue because
as the the way in which the european
union is putting out this proposal
again u.s steel companies or others that
are exporting to
to the eu are going to pay this average
price
average across all industries all
sectors average price
for their carbon for their their own ets
certificates in order to be importing so
they're gonna
you know calculate an average price uh
and then that price applies to next
week's imports if you will um
and and the and the issue then becomes
if there are
a lot of free allocations in one sector
but not in
others whether again that that creates
some unfairnesses
um and and you know the issue is whether
or not the free allocations are
in any way creating disincentives for
the us for i'm sorry for the european
steel industry
which as pascal has said is way ahead of
the rest of the world
in coming up with green steel and again
i think what everybody is in
everybody's interest is in encouraging
europe to keep doing that
please help the world develop green
steel technology
uh that's where we need to make sure
that we have the incentives and and the
question comes
whether the free allocations help or
hurt um in that process
of of encouraging uh the production of
of green steel within within europe uh
and whether or not the free allocations
again
create a sense of unfairness from u.s
producers that will say well
i didn't get a free allocation um and
therefore the fact that i have to pay
on my export going into europe creates
an unfairness
and thank you for that pascal would you
like to to quickly respond to our
questioner
yeah i mean let's not forget that if the
starting point
would be that uh all the key players the
economic players
would play the same game on carbonic
climate action we wouldn't don't be
in here discussing uh carbon border
adjustment mechanism okay so
let's let's not accuse the eu of doing
something that is just
trying to counter balance the fact that
others
are not doing their job i mean we just
try to be fair to
all the others but we have also to be
fair to ourselves
okay so uh again it's it's a bit uh
too easy to say well that the machinery
invented by the eu brain blah blah blah
blah now we just try to move forward on
climate and please do so
as we do so that we can as christians
said avoid
avoid having a carbon border adjustment
mechanism it's not our best plan
it's just a mechanism we need to uh have
it
fair and equitable and then regarding
the question because it's very important
one
i mean the to my view and then that's my
personal view here
uh the best way to proceed
would be to connect the amount of
free allocations to the ex
the the effective green investment
made by a company x so let's somebody
mentioned arcelormittal
i think it was in the question if
arcelormittal
invest in green steel i don't know let's
say
one billion euros or one billion dollars
then
you have free allocation to compensate
because of course
of course if you have to pay i take the
the theoretical example of arcelormittal
in europe
if you have to pay your allocation
because it's not free anymore
so you have to pay 50 euros per ton of
co2 you aim it
plus you have to pay the green
investments to invent
green steam then you pay twice and then
it's unfair actually you won't do it
so that's why we need to make sure that
if you invest
for real in a new industrial process
decarbonized
then you keep the free allocation if you
do not
then you pay the carbon price that's to
my view the right
balance uh to strike and that's will be
for the
uh reform of the carbon market uh
uh which will be presented in a month's
time by the european commission
terrific we have a minute and 42 seconds
but we've got a very good question from
jason poon
uh on the app desk how can you assess
the carbon emission of products
involving many countries in their
production chain will it uh imply
massive administrative costs
so i i i love this question because that
is a really we've been talking about
steel
and big commodities but this is actually
talking about the complexity
of our world today that is in all the
widgets we carry around
so um let's let's just have quick slices
of this snapshots
uh we'll start with uh christian would
you would you your thoughts yeah
we are starting with basic materials ah
it's steel
aluminum and so on we are not talking
about cars where you have a lot of
embedded so that's doable uh i say this
just after we have had the airplane deal
right on
boeing airbus and the complexity of who
makes what where
that's probably gonna that's probably
easier than that deal huh huh
jennifer will know okay great jennifer
hillman your thoughts
again i i think the answer to the
question is if you were trying to apply
this carbon text to very downstream
products to cars
or par or products that had components
from all over the answer is yes it would
be very very complicated and i think
that's why again the eu has been smart
uh they're starting with just sort of
basic commodities that tend to be
produced
in a single facility or by a single
company
and those companies definitely can make
these calculations i mean
in the united states this kind of data
has been collected for decades
under our various clean air provisions
and so
if you're limiting it to you know again
basic steel products
aluminum products cement products
fertilizer products
the answer is yes you can easily and i
think fairly readily determine
how much uh ghg gases were emitted in
the production of that particular ton of
steel cement you know glass if you start
to go much further downstream
it does get to be much harder uh i'll
say this i'm gonna give uh
our mr chairman pascal confident the
last uh word
but in in doing so referring back to
this conversation
that the french ambassador hosted on
this topic with pascal amy
and senator sheldon whitehouse i'll tell
you that senator sheldon whitehouse am i
invited to possibly join today but he
couldn't make it
said he he actually applauded uh this
mechanism
thought it was great and lamented that
the u.s government
wasn't as aligned with europe on these
issues with so pascal that is a point in
your corner
from one of our politicians so last word
pascal
well uh you know a carbon border
adjustment mechanism
is in the biden platform but to china
so that's interesting because actually
the u.s
the u.s administration will be somewhere
in the middle that's why kerry when he
came to europe
said i'm not against i have questions
which i think is the right way to have a
good relationship between the you and
the u.s
you challenge us we challenge you within
a but in a cooperative
and a positive mindset because at the
end of the day
what we want is the exact same goal
well with that i'm going to close this
session i want to thank pascal confed
chair
of the committee on environment public
health and food safety at the european
parliament
jennifer hillman who's had every cool
job in trade in washington d.c and
probably
geneva with the council on foreign
relations senior fellow for trade and
international
political economy there and again check
out her report on china's belt and road
quite interesting and here with me uh in
the room christian engenhofer
of both the european university
institute in florence
and the anceps in brussels thank you all
very much big and thank you to those who
ask questions a big round of applause
for our panel and
in five minutes we're going to continue
with vasilov havel transatlantic
dialogues the russia challenge
where to now and i see some people have
arrived for that so thank you all very
much
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