Why deductible international carbon taxes are a game changer

Carbon taxes from third countries can be deducted from CBAM certificates. Since, for instance, China’s ETS price is significantly lower (8 EUR/tCO2e) than the EU ETS’s (90 EUR/tCO2e), China would miss out on potential tax revenues. This simple rule is likely to incentivise global governments open launch own ETSs or carbon taxes and align prices to the higher rates in the EU.