EU Launches New Effort for International Carbon Pricing

The EU is launching a new effort to promote international carbon pricing ahead of the implementation of the carbon border tax. The European Commission has collaborated with over 40 countries to encourage the effectiveness of emerging carbon markets, particularly in China and India.

At least three countries have already passed legislation to create emissions trading systems (ETS). Brazil and Turkey have approved laws for carbon markets, while Japan is transitioning to a mandatory system.

China expanded its emissions trading system in March, now covering sectors such as aluminum, steel, and cement, which are affected by the EU's Carbon Border Adjustment Mechanism (CBAM). The country is also developing a carbon accounting framework with specific standards, expected to be finalized by the end of 2025.

EU Climate Commissioner Wopke Hoekstra emphasized that the recognition of the effectiveness of ETS and the impact of the carbon tax are encouraging countries to establish their own systems. The EU will publish a related policy document and report.

Brazil, which will host COP30, seeks a more collaborative approach to global carbon pricing and proposes the creation of an international "coalition" with common standards. It also proposes reducing carbon border fees for lower-income countries and using revenues to fund climate finance in developing countries.

EU officials have pointed out the difficulties in creating convergence between carbon pricing systems. However, Rafael Dubeux argued that the EU would benefit from participating in a broader plan.