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The EU is going to implement CBAM

“Lao Lan, we have a problem.”

Without looking up from his mobile, Lao Lan mutters, “What?”

“The EU is going to implement CBAM.”

Lao Lan doesn’t seem interested, “Is it some kind of continental ballistic missile?”

KY rolls his eyes, “No, you idiot! It’s Carbon Border Adjustment Mechanism.”

“Carbon what!?”

KY is glad to have gotten Lao Lan’s attention. He takes a deep breath, “The EU is going to impose a tax on all imports from countries with carbon tax lower than theirs.”

“Whatever for?” Lao Lan ask.

“Because they can. They have green alternatives like hydro, wind, bio-mass, geo-thermal, nuclear and what-not.”

“And?” Lao Lan is now all ears.

“They can impose a high carbon tax in their jurisdiction and their businesses and people can cope by switching to green alternatives,” explains KY.

“Good for them, but why impose a tax on all imports?”

KY continues, “They think it’s only fair and a good example for the world to follow to save the Earth. Besides, they don’t want their factories shifting to countries with lower carbon tax.”

“Will we be affected?” Lao Lan asks.

“Of course! Of all the ASEAN countries, we are their biggest trading partner and our carbon tax is a fraction of theirs! Our exports will face very high tariffs unless we impose a very high carbon tax ourselves.”

Lao Lan is perturbed, “Ok…..I will tell the boss.”

Later, in the boss’s office.

“Boss, we need to ram up carbon tax, big time.”

The boss looks visibly tired. “Why?”

Lao Lan clears his throat, “The Europeans have passed a law to impose a carbon tariff on imports. It will kick in around 2026.”

The boss frowns, “Go on”

“Exporters here will have to pay the difference in carbon tax between our country and the EU, making our exports less competitive,” Lao Lan explains.

The boss goes straight to the point. “What’s the carbon tax rate currently?”

“Ours is $5 a ton and theirs is more than a $100!”

“Which sectors will be affected?”

“For starters, those in the high carbon emission ones like iron and steel, cement, aluminum, fertilizer, glass, paper, heavy chemicals and energy production. They are also looking at downstream products in the future.”

The boss looks out the window. It doesn’t take him long to make a decision, “Ok, increase our carbon tax. Match their rate ASAP. Announce it at the budget but make it sound like we are doing our part to fight climate change.”

“But boss, will businesses be able to cope with the sudden increase?”

“You can always creatively rebate the tax to trade-exposed businesses right, especially those exporting to the EU?”

Lao Lan nods, “Sure thing boss. What about businesses selling locally?”

“Let them decide, but I suppose the bigger ones will pass the tax to the consumers.”

“Won’t the people protest?”, Lao Lan asks timidly.

The boss looks at Lao Lan, “We have prepared the ground for climate change quite a while now, carbon tax is a natural extension. No one will openly protest lest they be labeled socially irresponsible.”

At the budget announcement, Lao Lan boldly declares that we are very committed to doing our part in the global movement to tackle climate change. As such, we will raise our ambition to achieve net zero emissions by or around mid-century rather than the later half of the century, and will push decisively to raise carbon tax in the next few years, reaching $50 to $80 per ton by 2030 from the current $5 per ton. He clarifies that the government does not expect to derive additional revenue from the increase in the carbon tax. Some of the revenue will be used to cushion the impact on households and businesses. A large part will be used to support a decisive shift towards decarbonisation through investments in new low-carbon and more energy efficient solutions.

This story, of course, is a figment of my imagination, but it is based on actual events including the announcement of CBAM by the EU in July 2021 and our government’s rather abrupt push to raise carbon tax aggressively. Readers can decide for themselves if the government is more concerned about mitigating the EU carbon tariff or fighting climate change. They can also decide if the government is again helping big business at the expense of the people.

 

Foong Swee Fong

* This is an earlier post made some months ago but it is still relevant in today’s context.

 

yyy
READER COMMENTS BELOW

9 Responses to “The EU is going to implement CBAM”

  • High Inflation world:

    All these will lead to higher cost of living.
    Pity the young generation.
    Life is going to get tougher for them.
    We old guys will be gone…

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  • maui:

    “At the budget announcement, Lao Lan boldly declares that we are very committed to doing our part in the global movement to tackle climate change. As such, we will raise our ambition to achieve net zero emissions by or around mid-century rather than the later half of the century, and will push decisively to raise carbon tax in the next few years, reaching $50 to $80 per ton by 2030 from the current $5 per ton.”

    Raise $80 ? hmmm, government will be happy to raise to $200 and then tell you that you only pay $50, and the rest heavily subsidised by taxpayer money, and then happily collect these unneeded money into their pocket. It is certainly a good way to get money off reserve to be gambled by Temasek Holding. Don’t we already know how govt works ?

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  • xoxo:

    Carbon emi$$ion?
    Now that Asia is starting out,WE,ANGMOH$, NEED TO $LOW them DOWN!

    CARBON EMI$$ION tax shud be CUMULATIVE.
    WESTERN DEVELOPED COUNTRIES MUST ACCOUNT FOR ALL PAST *EMISSION* IN AGGREGATE.
    CARBON HAS BEEN *ACCUMULATED* WHEN WEST WAS FAST DEVELOPING.
    SO ?

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  • Damn good one...:

    That is a wonderful tale..!!
    Hope readers can read it and understand…

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  • "Showtime" for DPM LW:

    DPM Lawrence Wong: FTX case has raised ‘serious allegations’

    The collapse of FTX is both a “test” and an “opportunity” for DPM Lawrence Wong.

    To prove his objectivity and commitment to the truth he should instruct Parliament to convene a commission of inquiry (COI) to find out why Temasek invested hundreds of millions of taxpayers’ money in the FTX Ponzi scheme. The amount lost is small compared to the size of the Temasek portfolio but this is irrelevant.

    Convening a COI is also sn “opportunity” for the DPM because he will look more credible and may help convince voters to trust him.

    Tech: You want him to convene a COI to question his boss’s wife? You must be freaking joking, you think he really PM meh? Even if indeed he convenes a COI, it will at most be a wayang kulit, staffed by party members and famiLEE friends, got meaning bo? Go buy 4D better. lol

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  • Green for money, not green:

    We know how much the world is polluted when making batteries for EV. Electricity is produce by fossil fuels like gas, coal and nuclear fission polluted the world is not green. Amount of energy use to make batteries and convert to car is wasteful and could be much more energy. Those solar panels used to generate electricity pollute the environment when making them. The carbon tax is about taking money from people. With their theory of global warming, those poor nations which are destroy by their climate disaster never receive payments from collect these carbon tax. The western has pollute the world for centuries are not paying for their crime of pollution but they are earning for green. Oil producing nations who earn big buck from oil which pollute the world call for green. Hypocrisy at the max. Same as their other policies of war/peace.

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  • Singaporeans R Free Riders:

    xoxo:
    Carbon emi$$ion?
    Now that Asia is starting out,WE,ANGMOH$, NEED TO $LOW them DOWN!

    Yes, you got it right. Respect. Not many Opposition have in depth critical thinking.

    xoxo:
    CARBON EMI$$ION tax shud be CUMULATIVE.
    WESTERN DEVELOPED COUNTRIES MUST ACCOUNT FOR ALL PAST *EMISSION* IN AGGREGATE.
    CARBON HAS BEEN *ACCUMULATED* WHEN WEST WAS FAST DEVELOPING.
    SO ?

    Yes, you got it right again. Good in depth critical thinking.

    We have to make the West account for all past “EMISSION” when they are at it and having good time then.

    Yes, made US account for annexing Hawaii, agent Orange poison in Vietnam.
    Yes, made UK account for annexing Northern Ireland
    Yes, made China account for annexing Tibet.
    Yes, made Japan account for annexing Okinanwa.

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  • Singaporeans R Free Riders:

    Green for money, not green:
    We know how much the world is polluted when making batteries for EV. Electricity is produce by fossil fuels like gas, coal and nuclear fission polluted the world is not green. Amount of energy use to make batteries and convert to car is wasteful and could be much more energy. Those solar panels used to generate electricity pollute the environment when making them.

    Yes, well said. The evil CCP turn XinJiang into solar panels producing centre and cause massive pollution to the environment.

    Luckily we had Americunt sponsored Radio Free Asia and we get to knows the evil deeds of CCP.

    Polluting Factories Wreak Havoc in Xinjiang
    https://www.rfa.org/english/news/uyghur/factories-11052014144124.html

    Green for money, not green:
    The carbon tax is about taking money from people. With their theory of global warming, those poor nations which are destroy by their climate disaster never receive payments from collect these carbon tax. The western has pollute the world for centuries are not paying for their crime of pollution but they are earning for green. Oil producing nations who earn big buck from oil which pollute the world call for green. Hypocrisy at the max. Same as their other policies of war/peace.

    Yes, Western Hypocrisy at the max. and they had the audacity to preach to others thou shall not killed, lies, bear false witness blah blah blah

    Hypocrisy at the max indeed.

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  • CBAM:

    Lao Lan, we have a problem.”
    Without looking up from his mobile, Lao Lan mutters, “What?”
    “The EU is going to implement CBAM.”
    Lao Lan doesn’t seem interested, “Is it some kind of continental ballistic missile?”

    KY rolls his eyes, “No, you idiot! It’s Chee Bye Ang Moh”!

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