this post was submitted on 09 Oct 2023
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Neoliberal

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The world’s largest single market has launched a bold plan to tax carbon at its borders. The rest of the world is paying very close attention.

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[–] nbafantest 2 points 1 year ago (1 children)

when previously they would have been using that money to buy carbon credits from the UK taxpayer.

Can you explain this? Wouldnt the exporters still have to pay the carbon tax?

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago) (1 children)

My understanding was that the carbon tax applies to exporters from jurisdictions where carbon pricing undercuts the EU emissions market. So by oversupplying emissions credits in the UK post-Brexit (and thus letting the price per tonne drop to around half of the EU price), Sunak has brought UK exporters in-scope of the tax.

[–] MrHandyMan 2 points 1 year ago

You are correct. This is from the CBAM Q&A document:

Conversely, if a non-EU producer has already paid a carbon price in a third country on the embedded emissions for the production of the imported goods, the corresponding cost can be fully deducted from the CBAM obligation.