Today, the EU released a plan to combat climate change through reducing emissions. Significantly, key elements of this plan include increasing the costs on businesses whose activities contribute to climate change, even when those businesses operate outside the geographic confines of the European Union. Although only businesses that directly interact with the EU will be subject to these regulations, the size and reach of the EU's economy suggest that these regulations will be far-reaching indeed.
Climate change represents a global threat, and measures adopted by governments to address this issue may extend far beyond the typical geographic limits of regulation. It is important for businesses to consider these regulatory implications during evaluation of investments and activities in the future.
Another central but contentious proposal is a carbon border-adjustment tax that will target goods produced outside the bloc, so that European companies bearing the cost of decarbonization are not disadvantaged by cheaper imports from companies that do not.