19/10/23

EUROPE: EC to use CBAM CO2 taxes to pay off debts

As published on: steelnews.biz, Thursday 19 October, 2023.

According to plans of the European Commission and the European Economic and Social Committee, the revenues from the CO2 tax CBAM and the trading of ETS certificates are to be used for the interest and debt repayment of the 800 billion Euro Corona rescue fund. And the U.S. economy is strong and on an upward trend, according to recent data.

Strong economic indicators boost U.S. bond yields
Yields on U.S. government bonds saw healthy increases this week, reflecting positive economic data. The yield on the 10-year Treasury note rose to 4.85%, reaching levels not seen since before the 2008 financial crisis. Two-year and 30-year yields also moved upwards, indicating investor confidence.

U.S. economy remains strong
Driving the increases were newly released retail sales figures that handily beat expectations, pointing to robust consumer spending even amidst inflationary pressures. The report suggests the U.S. economy remains strong despite rate hikes intended to cool growth.

Economy on solid footing, FED likely to keep interest rates high
Minutes from the Federal Reserve’s latest meeting also buoyed yields, as policymakers signaled commitment to keeping rates elevated to combat inflation. Analysts see the Fed’s resolve as appropriate and likely to keep the economy on solid footing.

With upbeat data affirming economic momentum, yields are poised to find stability at higher levels in the months ahead. The increases reflect resilient U.S. growth and a measured approach by the Fed to guide the economy forward.

EC wants to use CBAM revenue to finance interest?
The European Commission (EC) is unyielding on the already messed-up CBAM CO2 tax, which was launched bumpily and unfinished on 1 October 2023. For the EC, a lot of money is at stake here, which it urgently needs. But not to finance allegedly green projects, but to pay off debts and interest, as can be seen from a recently published “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – An adjusted package for the next generation of own resources”.

It states, inter alia:

2.1 In December 2021, the Commission proposed three new own resources to finance the EU budget: a contribution from the ETS, a contribution from the carbon border adjustment mechanism (CBAM), and an own resource based on a share of residual profits from multinationals under the OECD/G20 agreement (Pillar One).

2.3 The Commission’s proposal is deemed urgent in view of the repayment with higher rates of interest of the EU’s borrowing to finance the RRF. The EESC agrees with the scope of the proposal and supports its early adoption before the next European Parliament elections.

Brussels wants its own tax revenues
It is also clear that Brussels is in a hurry to get the CO2 tax CBAM, which is not only unpopular in Europe but also internationally, into the bag before the next European Parliament elections in 2024. Or the revised emissions trading scheme. Whether there will be a majority for self-financing of the EU after the parliamentary elections is another matter altogether. The fact that the EC likes to push through such things in a hasty manner could already be observed with the departure of Frans Timmermans, when CBAM with all its structural errors was quickly finalised shortly beforehand.

CBAM money for green projects? Rather not…
And what should the CO2 money be spent on? The taxpayer might think that only green projects would be financed with it – as claimed by the EC. But, and this is also clear from the Next Generation Own Resources, the money is to be used to repay the EU’s 800 billion euro Corona rescue fund.

1.3 The EESC also broadly supports the European Commission’s adjusted package for the next generation of own resources, understanding its temporary nature and on the basis that it is limited to the repayment of the appropriations used to finance NextGenerationEU.

1.4 The EESC calls on the European Parliament and the Council of the EU to adopt an adjusted package for the next generation of own resources before the next European Parliament elections in 2024 and before the end of the current political term of office.

New taxes through the green CBAM back door
The responsibility for financing the European Union and its bureaucrats and civil servants in Brussels is thus being shifted further and further away from the state control bodies into the hands of the European Commission. And while the EU member states hypocritically pretend to work against rising inflation, they artificially increase the price of European industrial products through the green CBAM back door.

And who pays in the end? It is not an international corporation that blows CO2 into the sky, but the European citizen who pays the bill in the end.

Tags

European Commission Carbon Tax