U.S. failure to enact limits on global warming emissions could cost American companies that export to the European Union.

E.U. President Jose Manuel Barroso on Sunday said the European Commission is considering a charge on importers from nations without carbon limits. Companies from those countries may be required to buy carbon emissions allowances on exports into the E.U. This is intended to level the playing field with European companies who are already part of the European Emissions Trading System instituted to meet E.U. obligations under the Kyoto climate treaty.

Barroso said the Commission could “require importers to obtain allowances (emissions permits) alongside European competitors … There would be no point in pushing EU companies to cut emissions if the only result is that production and indeed pollution shifts to countries with no carbon disciplines at all.”

At the recent U.N. Climate Conference in Bali, Indonesia, the E.U. proposed internationally binding goals to reduce emissions to 25-40 percent below 1990 levels by 2020. The U.S. refused to make that commitment.

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Climate policy advocates have long maintained that a crucial reason to pass carbon limits at state and federal levels is to maintain U.S. economic competitiveness in a carbon-constrained world. Putting a price on carbon emissions sends a market signal that alerts companies to become more efficient and to invest in low-carbon products. The E.U. appears close to forcing U.S. companies to begin pating for carbon emissions, even in the absence of U.S. climate policy.

Washington state is the nation’s leading exporter per capita with export engines such as Boeing. Passage of the Washington Climate Action and Green Jobs Bill before the 2008 Legislature will prepare the state to enter a carbon cap-and-trade system being created by western states. That system could link up with similar systems at various stages of development in the Northeast and Midwest, as well as the E.U. Prospectively, exporters based in states that take part in trading systems might be advantaged over states without carbon limits. This adds to the case for passage of climate policy at the state level.

This article originally appeared in Climate Solutions Journal.

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