On Carbon Tariffs

Carbon tariffs have been making their debut in the public debate during the last couple of months. A good summary is provided by the German news weekly Der Spiegel.

The January 4th The Financial Times editorial "The Greening of Globalisation" argued that discussion on carbon tariffs is "rhetorical protectionist sabre-rattling to actual restrictions on international trade in goods and services".

Gernot Wagner and I argued against this position in our letter to the editor. Our two key messages are:

• While negotiating multi-lateral agreements on CO2 emission reductions is very complex, CO2 tariffs provide means for (unilateral) action
• We propose to not sink the tariffs in government coffers, but directly invest them into CO2 emission reduction projects in the producing / exporting countries, creating a win-win situation.