Kerry weighs tax on polluter nations as he scolds China on coal

Smog in China

The Biden administration hasn’t decided whether to impose a tariff on carbon-intensive imports from China and other countries as a way to fight climate change, U.S. envoy John Kerry said, even as he urged Beijing to slash greenhouse gas emissions and shut down coal plants.

The administration is evaluating a potential carbon border adjustment amid concerns it could inflame already fraught trade tensions, Kerry said during an interview in Rome Wednesday with Bloomberg Television prior to a gathering of environment ministers from the Group of 20 nations.

Kerry said President Joe Biden has asked his office to analyze the approach.

“We want to genuinely understand the implications taken by one group of countries or one country and how does that affect the overall dynamics of what we’re trying to do on climate as well as how does that affect already very tricky trade waters,” Kerry said. “We’ve got to get the answer to that.”

Congressional Democrats have proposed a tariff on carbon-intensive imports as part of $3.5 trillion tax-and-spending legislation – a move that comes amid growing global interest in the approach designed to prod slow-moving countries to crack down on their own greenhouse gas emissions while protecting domestic industries obliged to follow pollution curbs.

But Kerry, who spent nearly three decades in the Senate and is now special presidential envoy on climate change, said the congressional plan is only a “placeholder” while the administration studies the issue. “The United States has not made any decision to support it, and we have some concerns about what the impacts may be,” Kerry said. “We need to evaluate them very closely.”

Even as the administration deliberates using tariffs as a climate tool, it is pushing China, the world’s top emitter of greenhouse gases, to move more rapidly to stem that planet-warming pollution. It’s key that China peak its greenhouse gas emissions before 2030, Kerry said.

“China has many coal plants that are more than 40 years old, they don’t make money, they’re not efficient,” Kerry said. “We’re not pointing fingers. We’re stating facts – that China is now the largest emitter.”

China and the U.S. have held more than a dozen virtual sessions on climate in recent months, and Kerry said he is planning a trip to China toward the end of August “to further try to reach agreement, if we can, on ways to cooperate.”

Global efforts should focus on keeping warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) – a critical tipping point – and moving toward a goal of net-zero emissions by 2050, Kerry said. It’s “OK” that “China’s goal is different from that,” Kerry said, “as long as they are doing things that are possible.”

The Biden administration’s efforts are complicated by tensions around human rights, trade and intellectual property. So far, the administration has taken a carefully calibrated approach to countering allegations of mass detention of predominantly Muslim Uyghurs by imposing narrowly focused import restrictions on a Chinese manufacturer of a key ingredient in solar panels instead of a broader ban. China denies the allegations, and progressive activists have warned that fueling confrontation with China may undercut efforts to curb climate change.

Energy ministers from G-20 nations are meeting in Naples, Italy this week amid increasing pressure to agree to meaningful, ambitious action at the UN climate talks in Scotland starting Oct. 31. Kerry signaled that an end to subsidizing fossil fuels should be on the table.

“There’s no excuse today for subsidizing the problem; that just doesn’t make sense,” he said. “We also need to stop funding new coal-fired power plants – at least move to gas, which is 50% less polluting than coal,” Kerry said.

Under the 2015 Paris climate agreement, nations agreed to limit the planet’s warming to well below 2 degrees Celsius and pursue efforts toward 1.5 degrees.

“We are heading toward catastrophe – and we already see the beginnings of that with the floods in Germany and Belgium, the floods in China now, the incredible rainfall which comes from the warming of the ocean,” Kerry said. Rather than only paying for the consequences of climate change, the world should coalesce around carving out a “new clean energy economy,” which can produce millions of jobs and better quality of life, Kerry said.

The U.S. has yet to provide additional funding to help poor developing nations on the front lines of climate change -- money green activists say is essential to advance negotiations.

Kerry reiterated that he is pressing Biden to step up U.S. climate aid, including through personal conversations and a recent memo on the topic. “It is important that the United States do its fair share,” Kerry said. “The pledge has been made, and the pledge will be increased.”

Biden vowed in April to spend $5.7 billion annually on climate finance for less wealthy nations and has also asked Congress to deliver $1.2 billion more to the United Nations Green Climate Fund. While that’s a significant increase over previous American pledges, it falls far short of what climate activists say is necessary and what other nations have promised.

“We want to make sure that what we do is real,” Kerry said. “We don’t want to rush into something without an understanding of exactly what’s possible.”

Kerry said world leaders can build on climate commitments made by Group of Seven nations at their June gathering, despite U.S. pushback on more ambitious potential pledges to end the use of coal-fired power domestically and end the sale of conventional gasoline-powered cars.

The U.S. posture was “not a resistance,” but instead reflected the political and legislative realities of the nation, Kerry said.

“The legislative schedule of the United States sometimes doesn’t lend itself to the timing of one of those meetings, but I have great confidence that the United States is going to be as aggressive as any other country on those issues,” Kerry said. “The president believes subsidies need to be phased out. The president believes we need to move aggressively to raise ambition. And the president believes we need to have a power sector free of carbon by 2035. That’s aggressive.”

© 2021 Bloomberg L.P.

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