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HOW DO WE DEVELOP A SOUND DOMESTIC GREENHOUSE GAS EMISSION REDUCTION POLICY THAT EFFECTIVELY REDUCES ATMOSPHERIC CARBON DIOXIDE, PRESERVES DOMESTIC COMPETITION,

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Presentation on theme: "HOW DO WE DEVELOP A SOUND DOMESTIC GREENHOUSE GAS EMISSION REDUCTION POLICY THAT EFFECTIVELY REDUCES ATMOSPHERIC CARBON DIOXIDE, PRESERVES DOMESTIC COMPETITION,"— Presentation transcript:

1 HOW DO WE DEVELOP A SOUND DOMESTIC GREENHOUSE GAS EMISSION REDUCTION POLICY THAT EFFECTIVELY REDUCES ATMOSPHERIC CARBON DIOXIDE, PRESERVES DOMESTIC COMPETITION, AND IS COMPLIANT WITH INTERNATIONAL LAW? Carbon Fee & Dividend with a Border Tax Adjustment Christopher Byrd Tallahassee Group Leader Citizens Climate Lobby 2012 International Conference The cure for climate trauma

2 WTO- What is it? World Trade Organization Regulates trade between participating countries Provides a framework for negotiating and formalizing trade agreements Provides dispute resolution process to enforce WTO agreements ratified by member governments WTO replaced the GATT (General Agreement on Tariffs and Trade) in 1995 Original GATT text still in effect under WTO policy, with 1994 modifications

3 WTO Significance U.S. and Canada are participating members of WTO, therefore bound by WTO agreements Limits imposed by WTO on trade agreements between member countries and domestic policies that may hinder these trade agreements Climate legislation containing competitiveness provisions are under WTO scrutiny

4 Competitiveness Provisions Measures implemented in specific legislation to ease concerns of losing trade advantages internationally Leveling the Playing Field Examples EU: allocates emissions allowances to GHG intensive and trade-exposed domestic manufacturing industries at no cost: International Reserve Allowance Program Australia: The Jobs and Competitiveness Program under the Clean Energy Legislation safeguards industries that conduct trade-exposed activities and have the most significant exposure to a carbon price, it is to provide $9.2 billion in assistance between 2012 and (No BTA)

5 Fee & Dividend F&D policy applying to imports could be framed as a permissible Border Tax Adjustment: is charged as an extension or equivalent to the charge imposed on domestic products subject to F&D Impose similar cost on imports Must not discriminate imports against domestic products or discriminate imports from one country over another

6 BTA Must Not Be Discriminatory Examples of Discriminatory charges: arbitrary charges charges that favor a countrys imports over another countrys protectionist charges: charges that favor domestic products over imports F&D can pass WTO scrutiny if the BTA is not discriminatory

7 Environmental Exceptions BTA seen as discriminatory could still be allowed under the Environmental Exceptions rule: Article XX of GATT (Section VI) If the BTA relat[es] to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption (F&D)

8 Analysis: F&D effect on imports The F&D BTA should: Consider local conditions in foreign countries Include countries efforts to curb climate change Consider level of economic development in countries Environmental justifications for F&D BTA Competitiveness Provision: Internalize social and external costs of carbon pollution Account for emissions migrations Enable countries to make greater emissions cuts Provide incentives for countries to join in international efforts to curb emissions

9 Carbon Equalization System Harmonizing Global Climate Regulation A Carbon Equalization System necessary to level the international playing field by imposing the same or similar costs on imports as F&D policy would impose on domestic products and possibly exempting exports (Linkage) If domestic producers lose their competitive edge, they may outsource production to nations with unregulated GHG emissions (Leakage) Keeps the carbon price signal up, in a consistent and predicable manner Accounts for international progress under the UNFCCC, the G8 or the Major Emitters Forum

10 State Cap & Trade Or Tax Most relevant legislations E.U. C&T 2009 Climate and Energy Package: Emissions trading schemes Effort Sharing Decision, aims to reduce GHGs emissions from sectors not included in the EU ETS such as transport, buildings, agriculture and waste Promotion of the use of renewable energy - Carbon capture and storage India Tax - applies to coal (domestic and imported) at the rate of Ruppies 50 (~USD 1) per ton 2007 Ethanol Production Incentives 2008 National Action Plan on Climate Change 2010 Post Copenhagen announced domestic actions Germany C&T 2007, 2008 Integrated Climate and Energy Programme 2010 Energy Concept for an Environmentally Sound, Reliable and Affordable Energy Supply 2009 Renewable Energy Sources Act (RESA) U.K. C&T and Tax - applies to commercial and public energy use (electricity, gas, solid fuel and liquefied gases) 2001 Climate change levy 2008 Climate Change Act 2010 Carbon Reduction Commitment Energy Efficiency Scheme 2010 Feed in Tariffs for renewable electricity Italy C&T 2007 Climate Change Action Plan 2002 Strategy to Cut National Greenhouse Gas Emissions France C&T 2009 Framework Law for the implementation of the "Grenelle de l'environnement" (Law Grenelle 1) 2010 Law Grenelle Australia Tax - shift to cap-and-trade after Clean Energy Legislative Package adopted these 2011 laws: Clean Energy Act Clean Energy Regulator Act Climate Change Authority Act Clean Energy (Consequential Amendments) Act o Dealing with charges under the carbon pricing mechanism. Spain C&T Law 13/2010 amending Law 1/2005 Regulation of trade of greenhouse gas emission allowances Spanish Strategy of Climate Change and Clean Energy Gas and Electricity Planification Spanish Forestry Plan Poland C&T 2001 Environmental Protection Law 2030 Polish energy policy until 2030

11 Challenges and Disadvantages Cost of implementation - Competitiveness Carbon Footprinting – imports v. exports Others?

12 Sources Joost Pauwelyn, U.S. Federal Climate Policy and Competitiveness Concerns: The Limits and Options of International Trade Law Nichole Hines, Vy Huynh, Yuni Kim, International Harmonization of Carbon Pricing: A Proposal for the U.S., Geneva Graduate Institute (2012) Slayde Hawkins, Skirting Protectionism: A GHG-Based Trade Restriction Under the WTO, 20 Geo. Int'l Envtl. L. Rev. 427 (2008) Paul-Erik Veel, Carbon Tariffs and the WTO: An Evaluation of Feasible Policies, 12 J. Int'l Econ. L. 749 (2009)

13 Questions? Internal conflicts? Lets BRAINSTORM


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