Germany Proposes Establishing 'Climate Club' Trade Dispute Response Council

Photo by Reuters

[Asia Economy Reporter Yujin Cho] Germany has proposed the establishment of a global coalition of major countries called the "Climate Club (tentative name)" to address trade frictions arising from the introduction of carbon border taxes.

According to major foreign media, on the 22nd (local time), Olaf Scholz, Germany's Vice Chancellor and Finance Minister, during a meeting with Ant?nio Costa, Prime Minister of Portugal, the rotating EU presidency country, stated that the European Union (EU) must cooperate with major countries such as the United States, Japan, and China to agree on common rules and standards to reduce carbon emissions.

Vice Chancellor Scholz expressed concern that climate change-related regulatory measures could lead to increased costs for energy-related companies within Germany and the EU, negatively affecting their competitiveness. He added that the EU should discuss and consult with major countries accelerating their decarbonization policies, including the United States, Canada, the United Kingdom, Japan, and China, on common principles related to the introduction of carbon border taxes.

Scholz said, "The time has come to discuss having a coalition that works together for a common goal without competing against each other and strives for better global climate change policies."

The European Commission, the EU's executive body, plans to discuss the EU's 2030 climate goals at the regular summit of the 27 member states scheduled for the 24th to 25th. Foreign media report that Germany is expected to propose the establishment of the Climate Club at this meeting.

The carbon border tax is a trade tariff applied when goods and services are exported from countries with lax carbon emission regulations. The EU is currently working on related legislation, aiming to submit the bill next month.

In March, the European Parliament urged the EU to impose carbon border taxes on imports of certain industrial products by 2023.

The EU has set a goal to achieve carbon neutrality by 2050, meaning net zero carbon emissions that cause global warming.

However, there are forecasts that cooperation may be difficult to achieve because emerging economies with large export shares in carbon-intensive sectors such as steel and petrochemicals, including China and India, could be adversely affected by the carbon border tax.

This content was produced with the assistance of AI translation services.