Yet, for Prime Minister Scott Morrison, Europe’s proposed step in the direction of a consumption-based carbon tax may prove to be as much an opportunity as a challenge.
"Like the politicians of other advanced economies, Europe's leaders are under pressure to make bigger cuts in greenhouse gas emissions.”
So what are the Europeans up to? And why is it so threatening to leaders like Bolzano and Mahathir?
The proposal from EU president Ursula von der Leben is for Europe to impose its own carbon tax on imports that have not already been subjected to a similar carbon price in their country of origin: a “border tax adjustment”, the politicians like to call it.
Like the politicians of other advanced economies, Europe's leaders are under pressure to make bigger cuts in greenhouse gas emissions. But, to do so, they need to deal with the issue of “carbon leakage”.
Europe's production-based emissions trading scheme imposes a carbon price on emissions produced in Europe - but not on emissions embodied in the imported production of foreign goods and services.
Without modification, production-based taxation puts European exporters and import-competing industries at a competitive disadvantage against producers in countries with little or no tax on carbon emissions.