Carbon Trade War and the Energy Transition

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Kevin Book

Managing Director, Research

ClearView Energy Partners, LLC


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Kevin Book is co-founder, head of research, and the geopolitics and fossil energy policy lead at ClearView Energy Partners, LLC, an independent firm in Washington D.C. that serves institutional investors and corporate strategists. Kevin is also a non-Resident Senior Advisor to the Energy Security and Climate Change Program at the Center for Strategic and International Studies; a member of the Council on Foreign Relations; and a member of the National Petroleum Council. Kevin appears frequently within print and broadcast media, contributes to policy forums convened by government and private organizations, and meets with top Washington and global decision-makers. He has also testified before several House and Senate Committees. Prior to co-founding ClearView, Kevin worked as a senior energy analyst for a national investment bank. He holds an M.A. in law and diplomacy from the Fletcher School of Law and Diplomacy and a B.A. in economics from Tufts University.

For years, asymmetries between countries that assessed a price on greenhouse gas emissions and those that did not created a risk of economic confrontation, and the Paris Agreement’s bottom-up reliance on “contributions” in place of Kyoto’s top-down “commitments” did little to diminish that risk. To the extent that fiscal stimulus stokes protectionism, multi-trillion-dollar outlays during the Great Recession and Covid pandemic—to say nothing of Inflation Reduction Act (IRA) tax credits—also seem a factor. Most recently, duties that favor the cleaner emissions performance of G-7 countries have emerged as another possible Western mechanism for geopolitical repartitioning.

Energy, climate and trade policy now appear to be converging towards carbon trade war on three fronts: (1) the still-vague construct of a multilateral “climate club”; (2) ongoing U.S. negotiations with the E.U. (and, potentially, Japan and the U.K.) towards carbon intensity-based tariffs for steel and aluminum: collectively, a Global Arrangement on Sustainable Steel and Aluminum; and (3) country- and region-specific laws, most notably the E.U.’s Carbon Border Adjustment Mechanism (CBAM), which began its trial phase on October. CBAM fees may not bite until 2026, but exercise of counting—by itself—could shape trade flows well before then. Indeed, the program might also impose de facto strictures on oil and gas even if the E.U. does not explicitly include them as covered goods.

In short, although the U.S. has yet to impose a nationwide price on carbon (notwithstanding the IRA’s methane fee), one could soon wash ashore, and a price set at the coast could eventually function much like a price set in the Nation’s Capital. Such a price could theoretically add momentum to green transition. But, in practice, trade friction and fragmentation could also create headwinds to clean energy procurement and deployment.

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Date and Time
Oct. 10, 2023, 12:30 to 1:30 p.m.
In Person EER 0.904 or Stream Online (via Zoom or YouTube)
Event tags
UT Energy Symposium