Carbon pricing can work, but need to be aware of Reuters

BRUSSELS (Reuters)-US Treasury Secretary Janet Yellen admitted on Tuesday to use carbon pricing schemes, such as the planned new European border tax, but emphasized that such measures should take into account the progress in reducing emissions in other areas.

Yellen was in Brussels the day before the EU announced its major package of measures to address climate change.

Among them, it will outline what Carbon Boundary Adjustment Mechanism (CBAM) aims to reduce emissions by creating financial incentives for green production and preventing “carbon leakage”, as it is well known to shift operations to countries with fewer emissions restrictions.

“Carbon taxes or carbon pricing limits and transactions are a very effective way to solve the problem of emission reduction, but there is nothing that requires countries to adopt this approach,” she said in an interview with Reuters.

She added: “If a country adopts carbon boundary adjustments, how it should treat countries that also implement environmentally friendly production technologies in different ways is very important.”

She agreed that countries seeking to reduce their own emissions have the right to solve possible carbon leakage problems.

“I think this is an important principle, and when we reach this point, it will apply to the United States, and of course it also applies to the European Union and other countries,” she said.

The EU’s package plan to be announced on Wednesday is part of its efforts to reduce net greenhouse gas emissions by 55 percent from 1990 levels by 2030.

The European Commission stated that its plan will comply with WTO standards and be fair, requiring importers of steel and other commodities to purchase emission certificates at the same price as domestic producers. But it has caused concerns in many countries, from Australia to Russia.