The European Parliament voted for the European Commission to come up with a legislative proposal to stop so-called 'carbon leakage'.
MEPs want to place a carbon levy on certain imports from less climate-ambitious countries, in order to raise global climate ambition.
The idea behind the levy is to stop so-called "carbon leakage", something that happens when there is an increase in greenhouse gas emissions in one country, due to an emissions reduction by a second country with less strict rules.
Lawmakers in Brussels worry that the EU’s increased ambition on climate change might lead to "carbon leakage", meaning that global climate efforts will be hampered if European production is just moved to non-EU countries that have less ambitious emissions rules.
But French MEP Yannick Jadot told Euronews that the ultimate solution to the problem, beyond a carbon levy, is to get other larger countries on board with the same emission reduction plans.
"If there could be a partnership between Europe and the US about the issues of climate question and industry protection it would be wonderful news. On China, on one hand, it is a country that emits a lot of greenhouse gases, but it is also a country that innovates, it is also a country that puts in place a CO2 market," he said.
Depending on the scope of the carbon levy that is eventually introduced, it could bring in between €5 billion and €14 billion per year according to the European Commission.
The levy would initially cover products from energy-intensive industrial sectors, such as electricity, cement, metals, paper and glass.
The World Trade Organization will eventually debate the carbon levy among its 164 members once it comes into force and Simone Tagliapietra, a Research Fellow at Bruegel Institute, told Euronews that any new tax needs to be clear on what it wants.
"What is important is that this is agreed in a multilateral basis, this is really explained transparently at the Word Trade Organization. The point is that these free allowances will have to be phased out very quickly in the Emissions Trade System in order for the carbon price in Europe to go up to the level that is necessary to carbonise the continent."
The next step will be for the Commission to present a legislative proposal on a carbon tax in the second quarter of 2021.