Carbon tariffs should only be ‘a last resort,’ cautions new OECD boss

Countries should exhaust all other options before resorting to carbon tariffs, said Mathias Cormann, the new secretary-general of the Organization for Economic Cooperation and Development.

Cormann told a POLITICO Live audience Wednesday that the threat of what the EU calls a “carbon border adjustment mechanism” should be used to coax allies into a global climate deal, but must be implemented only if negotiations fail. The EU plans to publish its proposals for the carbon-linked tariff in July.

Echoing previous statements by U.S. officials, Cormann said, “This should absolutely just be a last resort. It would be much preferable if countries around the world could be persuaded to make a genuine and proportionate effort towards achieving the global mission, to get to global net-zero by 2050.”

Regarding the border tax, he said: “If we do have to go down this path, we have to be very careful we make judgments on where to calibrate that price.”

A “one-size-fits-all” approach to measuring carbon prices would be “very difficult" to make in accordance with the World Trade Organization's rules, he said. “I think there is a bit of homework to be done before we go down this path,” he said.