China Further Loses Price Advantage as EU Votes to Impose a Carbon Tax

Outside a state-owned coal-fired power plant near the site of a large floating solar farm project on June 14, 2017 in Huainan, Anhui Province, China. The floating solar field is built on part of a former coal mine. The solar farm now produces enough energy to power 15,000 homes. Officials say they are planning more projects like it, in an area where long-term intensive coal mining has led to large areas of ground sinking and environmental degradation. China remains the planet's top emitter of greenhouse gases and accounts for about half of the world's total coal consumption. Kevin Frayer/Getty Images

After a two-week hiatus, the European Parliament finally passed the revised Carbon Border Adjustment Mechanism (CBAM). Consequently, China further loses its price advantage in exporting carbon-intensive products to Europe, a second blow to the country’s exports after 32 nations stopped preferential tariff treatment at the end of 2021.

CBAM aims at ensuring an equivalent carbon price for domestic and imported production on selected goods, and thereby encouraging the EU’s trading partners to reduce their carbon emissions.