 Today, we are pleased to welcome Professor Anna Marhold. Dr. Anna Marhold is an assistant professor at the Institute of Public Law and the Grotius Center for International Legal Studies at Leiden University in the Netherlands. Her specializations are International in European Energy Law and Regulation, International Economic Law and International Trade Law. She holds a PhD in law from the European University Institute in Florence, Italy. Her thesis explored the challenges of changing energy markets in international trade law. This is her third year teaching in the VLS summer session program where she teaches the course Global Energy Law and Policy. And today she'll present the talk, what's the actual deal with the EU Green Deal? Please join me in welcoming Professor Anna Marhold. Thank you very much, Jenny. Hi, everyone. My name is Anna Marhold. I'm an assistant professor at the Grotius Center for International Legal Studies at Leiden Law School in the Netherlands. And I wanna thank you again for inviting me back to Vermont Law School to teach my course on Global Energy Law and Policy. It's a pleasure to be with you again. I'll be digitally this time. And I especially wanna thank Jenny Rushlow, Kevin Jones and Courtney Collins for really being so welcoming. And yeah, I really wanna thank you for this opportunity. So what I wanna talk to you today about during this hot topics lecture is the European Green Deal. This might have been something you've been hearing about recently. You hear it quite a lot in the news. It's a strategy that the EU has published and is quite serious about. But what is the actual deal with the EU Green Deal? So that is what we've all discussed today. And my presentation will be structured as follows. So first of all, I wanna talk about the main features of the EU Green Deal. So what is the EU Green Deal in effect? What does it want to achieve? Then I wanna focus on some of the key pieces of legislation that come with the EU Green Deal. And then zoom in on one of the more controversial aspects of the EU Green Deal, namely the carbon border adjustment mechanism that is now only a leaked document that isn't officially yet. Then I wanna touch upon some issues of compatibility with WTO law. This is also very relevant, especially today. And also to discuss some of the potential consequences for the US in this respect. Will the EU Green Deal affect US trade policy, for instance? So these are all the things that we wanna discuss and touch upon today. After the presentation, I wanna look forward to receiving your questions and comments. And I hope we can have a fruitful debate. Well, let's get started. So the EU Green Deal is a very short document in fact. It's only a 24 page strategy document, which is not a law. And it was published by the European Commission at the end of 2019 before COVID pandemic outbreak. Basically it is a very ambitious plan to decarbonize Europe. And it covers every aspect of society and the economy. Through the EU Green Deal, the EU really aspires to be a global leader in the green energy transition. But also it doesn't want to be left behind in a green technology shift. For instance, I've seen that China has been absorbing most of solar power production. And the EU just sees an opportunity here and really wants to become a leader in this respect and wants to be innovative when it comes to green technology as well. So some of the objectives of the EU Green Deal are really to transform the EU into a modern resource efficient and competitive economy. And the ambitious goal is to be climate neutral as the EU by 2050. But as an intermediate goal, the idea is to have 55 less emissions by 2013 compared to the levels in 1990. The underlying idea is also to really decouple economic growth from resource use and to act in a kind of inclusive and holistic manner in the sense that the idea is to have no person and no place left behind. Of course, there's a price associated with this and the estimated costs of the EU Green Deal are 82 to 147 billion euro a year. On the other hand, the EU also sees this as an investment because if you think for instance of rising ocean levels, the EU would have to invest extreme amounts of money to prevent and mitigate that. And in this sense, this is seen rather as an investment than as a huge expense. The EU Green Deal really expands into various areas and various policy areas. And they are highlighted here. So again, you see here the goal of the EU to act as a global leader and also the fact that nobody should be left behind. Now, you might say that this sounds maybe very idealistic, but on a policy level, it seems that the von der Leyen and Thiemmermans have realized that the EU can really use Green Growth as a tool and make it the heart of EU policy and also to use it to its competitive advantage. So apart from increasing the EU's climate ambition in 2030 and 2050, it's also very much about supplying clean, affordable and secure energy, mobilizing the industry for clean and circular economy. It's also very much about building and renovating in an energy efficient way. You can imagine that a lot of the buildings that we have in Europe, especially the old ones, are not particularly energy efficient. Then it's also very important that there is a zero pollution ambition for a toxic green environment. Apart from that, it also expands the EU Green Deal to preserving and restoring ecosystems and biodiversity. With regard to agricultural policy, it is also about having a fair and healthy and environmentally friendly food system. And also about accelerating the shift to sustainable response mobility. So as you can see, it's really an extensive plan that really covers all sectors of the economy that is ambitious in various dimensions with regard to agricultural policy, energy generation and supply and energy efficiency and ecosystems and biodiversity. It doesn't say that it's all easy and very straightforward to transform the current systems that we have in Europe. And one very obvious criticism is that it is very hard to transform common agricultural policy. European and common agricultural policies currently the most costly EU policy in that it's a very heavily subsidized sector. And the agricultural sector in the EU is currently responsible for 10% of EU greenhouse gas emissions. So in the provisional agreement with forming common agricultural policy, there are some new elements that are focused towards improving the environment. So for instance, 55% of European funds must go into ecosystems and 35% of rural development funds must go into projects that promote environmental climate and animal welfare practices. What is also new in the reforms of the common agricultural policy is social conditionality. So it means that those farmers and sectors that benefit from subsidies have to comply with social and labor regulations. There is a lot of criticism of this provisional agreement reforming EU common agricultural policy. And it especially comes from environmental NGOs. For instance, the agreement doesn't include the form that really obliges member states to put into place new practices to decrease greenhouse gas emissions, which favors producing farmer practices. So the fact that there wasn't any greenhouse gas emissions reductions talks included in this agreement is seen as really a downside. And a lot of green environmental activists simply state that these reforms are greenwashing. Although some advocates of these reforms, on the other hand, say that this is still progress, the fact that environment is really now included as a topic and also as a condition in the common agricultural policy. So one of the very new features is that there is now, as of yesterday, the 28th of June, an EU-wide climate law. So this is basically one of the pieces of key legislation of the EU Green Deal. There wasn't a EU-wide climate law before. And this is the first time that the polls of the EU Green Deal are really, really enshrined in EU law and have to be followed up by EU member states. So let's turn to some of these key parts of EU legislation with regard to the EU Green Deal. The EU-wide climate law really enshrines these targets so the carbon neutral target by 2050 and the 55 emission cuts as compared to 1990 by 2030 into law. And it targets overall EU emissions. So there's a EU-wide target rather than binding requirements for each country. So each country has to see what it can do and what it can be realistic to do. But there is rather than trying to bind every country EU member states separately, there is a target for overall EU emissions. Aside from that, the EU-wide climate law also establishes an independent climate expert body to monitor the progress with regard to decarbonizing the European Union by 2050. So apart from this EU-wide climate law that is the key piece of legislation with regard to the EU Green Deal, there is a myriad of regulations, plans and changes to EU law. One of those we briefly discussed with regard to agriculture but there are a lot of strategies with regard to hydrogen, building renovation, offshore wind energy, there's for instance a big plan to have a huge offshore wind part in the North Sea. Methane pollution, sustainable investment and a circular economy. But maybe most famous at the moment or the most discussed is the carbon border adjustment mechanism, the CBAM proposal. This is currently a draft that was leaked by the Commission in June and the final version is to be made public in July. Overall, it will be up to separate member states to execute what the laws of EU Green Deal legislation prescribe. I wanna focus on one of the most controversial proposals as part of the EU Green Deal and that is the carbon border adjustment mechanism because this right away affects industries that want to import goods into the European Union. So the whole idea of the EU carbon border adjustment mechanism is to impose carbon emission costs on the imports of goods including steel, cement and electricity. And it mainly applies to these types of products, steel, iron, cement, fertilizers, aluminum and electricity will be the main targets. These are considered often very energy intensive and polluting the products. So it extends the European emission trading system to basically to non-EU industries of this kind. And it's a highly controversial part of the EU Green Deal first of all because there are direct consequences for countries whose industries import these products into the EU. And because it can also run a file of rules of the World Trade Organization which I will talk about a bit later. The whole idea is to phase this carbon border adjustment mechanism in from 2023 and then have it fully implemented by 2026. So the proposal that was leaked spells out a method for calculated for calculating embedded emissions in imported products. And it covers both direct emissions. So those that are involved in the production. So what is that? That means where the producer has direct control over the process, but also indirect emissions such as electricity consumed during the production and production process of goods. So it's both the production process itself but also the input of energy that is used for producing these products. So according to the leak document, the carbon border tariff will not apply to countries within the customs union. So that includes Iceland, Liechtenstein, Norway and Switzerland, nor will it apply to EU overseas territories. And if countries have a similar carbon pricing and mechanism to Europe, the tariff would also not apply. But countries that have a high climate ambition but don't necessarily have such a similar carbon pricing mechanism like the US and the UK are not automatically exempt. On the other hand, the EU does consider to exempt good poorest countries with regard to applying this mechanism. Now the CBAM would integrate into the European, the existing European emissions trading system and it would work in a similar way. So specifically only authorized Declarens would be allowed to import the covered goods. So it would need to get an authorization prior to be able to import these products into the European Union. So these Declarens would be authorized by a so-called CBAM authority when they meet the criteria and provide a bank guarantee. So the amount of the guarantee would need to cover the amount of the price of CBAM certificates that authorized Declarens surrenders each year to account for the emissions embedded in the imports of goods for the current and forthcoming year as estimated by the CBAM authority. And each year these authorized Declarens would be obliged to submit annual declarations showing the emissions embedded in important goods during the previous calendar year and the number of surrendered CBAM certificates. So in this sense, there will be quite a lot of hurdles for those industries that would like to import these particular products into the European Union. Moreover, the emissions embedded in the important goods as shown by the number of surrendered CBAM certificates would also need to be verified by independent verifier. And the authorized Declarens may claim a reduction in the number of CBAM certificates to be surrendered corresponding to the carbon price paid in the country of origin for the declared emissions. There is also a special provision for aircraft operators in third countries. So there is a possibility for them to get registered in the EU with the confirmed amounts of the embedded emissions in goods produced in those installations. And CBAM certificates could also be repurchased and sold by the CBAM authority to authorize Declarens as the price calculated as the average of the closing price of all auctions of EU ETS allowances. And an interesting element is that there is no term of validity of an authorization in the commission proposal. And in general, it should be mentioned that the proposal as such still remains quite broad and not very detailed with respect to how some of these mechanisms exactly are to work. So just a quick reminder for those who don't quite know how the European Union emission trading system works, that works on the basis of a cap and trade principle. So the whole idea is to cover industries in the power sector and the manufacturing industry as well as airlines operating within the EU and the customs union. So Iceland, Liechtenstein and Norway as well. So a cap is set on a total amount of certain greenhouse gases that can be emitted by the installations covered by the system. And the cap is reduced over time so that total emissions fall. And within the cap, installations bio-receive emissions allowances, which they can then trade with one another as needed. The limit on the total number of allowances available ensures that they have a value. So after each year, an installation must surrender enough allowances to fully cover its emissions. Otherwise heavy fines are imposed. And if an installation reduces its emission, it can keep the spare allowances to cover its future needs or else sell them to another installation that is short of allowances. So training brings flexibility that ensures emissions are cut where it costs the least to do so. And also a robust carbon price promotes investment in innovative and low carbon technologies. But the EU also allocates free allowances beyond the power generating sector, especially in those sectors where there is a fear of carbon leakage. So for instance, there are still quite a lot of free allowances allocated in the manufacturing industry as well as the airline industry. And it's estimated that almost half of all allowances are allocated for free, which might be an issue when implementing the carbon border adjustment mechanism. So I now wanna talk about the consequences this might have for compatibility with WTO law. So just as a brief reminder, the World Trade Organization is a multilateral international organization in Geneva that has 164 members at present. So a vast majority of countries around the world are members of the World Trade Organization. And the World Trade Organization maintains rules on the trading goods, services, and intellectual property rights. So those countries that are party to the World Trade Organization have to abide by the rules of the WTO. And until recently, because now the Apple body dispute settlement system is in an impasse, the dispute settlement mechanism of the WTO was a highly successful feature of the system because it is a mandatory, state-to-state dispute settlement for WTO members, first of all, and second of all, because of its technical nature and the fact that it is exclusive dispute settlement mechanism, so it would prevent parties from going elsewhere. This was seen as a highly successful feature of the system. More than 600 disputes have been settled by the WTO since its establishment in 1995. As I already alluded to a little bit before, the Apple body of the World Trade Organization is currently at an impasse due to disagreement on the appointment of new Apple body members, especially based on criticism on the functioning of the system by the United States. Nevertheless, the WTO has a lot to say about cross-border trade and since the CBAM affects cross-border trade, it also automatically is relevant for WTO rules. So with regard to liberalizing trade, the WTO has rules on preventing discrimination and reducing trade barriers, the barriers to trade mainly for its members. One of the most basic rules of the WTO is what is called the most favorite nation rule, which basically means that any advantage, favor, privilege, or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined in the territories of all other contracting parties. Now, you can imagine that if certain countries fall under the CBAM, the European Carbon Border Adjustment mechanism with regard to the imports of their products and others don't, this might already be problematic. So for instance, if you think of developing countries that might be exempted, but also customs unions, countries that do fall within that because they use a customs union, nevertheless, there might be differences with regard to the treatment of products from different countries, this might be problematic. Also because you have to look at the like product. So if you treat steel and aluminum from one country that doesn't have a similar emissions trading system in place, such as the EU, as you do from another country that does have such a system in place, this might run a file of Article 1. Why? Well, if you look at the like product guidelines that exist within the WTO framework to determine what our two products are like, we generally look at the characteristics of the product. We look at the end use of the product, then also how the product is classified under the Harmonized System Convention and the schedule of concessions of EU member states. And we also consider consumer tastes and habits. So whether the product is attracting the same consumers. Now, you can imagine that if we think of how a product is produced, so-called process and production methods, and for instance, what type of energy or what type of carbon footprint is used to produce a particular product. This is nowhere concretely reflected in these guidelines or these criteria. And therefore, you could say that to treat a product that looks the same and would meet all these requirements, but just different, is different with regard to the carbon content or the way it was produced, might be problematic to fall within the scope of this article. And these two products would likely qualify as like products. So again, if a country that imports these products is treated differently based on, let's say, the emission trading scheme that it has in place, then a country that doesn't have that, this might be a problem with regard to most favorite nation treatment. I also wanna highlight that some of the articles I discussed here with regard to WTO law are just a partial snapshot of all the articles that might be relevant with regard to the carbon border adjustment mechanism. There's also elements of subsidies, whether, for instance, such a mechanism could be considered a subsidy if it supports EU producers and their exports. This all depends on the final design and the final application of the carbon border adjustment mechanism and only time will tell. So here I'm only highlighting a couple of articles that are relevant and that might be problematic. But all in the end depends on the measure that the EU has in place and how that measure is designed. So although the EU's goal is to ensure that the CBAN is designed in a World Trade Organization compatible manner, there are definitely articles where this is still quite questionable or unclear and will only have to be shown in practice. So apart from article one that we just covered, most favorite nation treatment, another article that is relevant in this respect is article two of the GATT, which refers to the schedule of concessions. So within the WTO framework, you are allowed to discriminate but only allowed to discriminate within a transparent or in a transparent manner, which means that you have to agree your tariffs or import tariffs on goods and the schedule of concession that every WTO member has becomes an integral part of the agreement and you are not allowed to lever, levy higher duties, import duties on the products that are in the schedule of concessions. Now, as it seems now, the carbon water adjustment mechanism is designed as an internal tax, so tax upon importation. If it functions like that and that internal tax applies equally to products within the EU, that could be compatible with the WTO. If however, it proves to be solely a basically an import duty disguised as a tax, this might be more problematic. The same applies to national treatment. So it is very important that for the EU to be successful in implementing the CBAN, it also has to abide by rules on national treatment. And national treatment is taken up in article three of the GATT and it basically states that imported products should be treated no less favorably than like products, than like national products. If we talk about likeness, I already discussed that in the framework of article one of the GATT. And again, we begs the question when two products are alike. But it basically means that the EU has to ensure that imported aluminum, steel, cement, and electricity is treated no less favorably than aluminum steel and electricity produced in the EU. Now, this might be problematic with regard to free allowances. As I mentioned before, the EU also allocates free allowances to particular industries. And potentially this might be a problem with regard to discriminating against imports of these industries from abroad. And so these are some of the issues that might be a problem with regard to WTO compatibility. Connected issues in this respect are also other tensions within the framework of the World Trade Organization, such as the divide between developing developing countries. It might be harder for developing countries to meet the standards as set out in C-Bam because they might have a lack of emission trading systems in place or because it's just higher to meet more difficult to meet higher environmental standards. And so in practice, the result might be that developing countries are more often subject to C-Bam costs rather than, let's say, developed countries that have cleaner mechanisms. The question that is really how permissible is it within the WTO context to exempt poorer countries from the carbon border adjustment arrangement? It would seem reasonable, but also again, this has to be carefully designed. And last but not least, within the framework of the WTO, it's sometimes very hard to draw the line between real environmental objectives, so advancing real environmental objectives, and by protectionism. So when you're an importer, that what's important to the EU, it will be very difficult for you to determine whether the EU policy in place is only there to protect the environment. It seems likely as it also will apply or applies the same to its national industries, but also to determine whether there are some protectionist elements, and often to go hand in hand. So it's almost impossible to always clearly distinguish the two. So yeah, indeed, there might also be this past protectionism here, and only timely time. It's important to note that the mandatory dispute settlement mechanism in the WTO, it works on a case-by-case basis, and a case has to be initiated for it to start a dispute. So there's no prosecutor within the WTO system that goes and monitors whether countries apply an abide by WTO rules, and on the basis of that, starts a dispute against the country, no. It has to be a country whose industry has been injured that starts a dispute against another WTO member. So if there is no dispute, there is no presumption of a problem. So time will tell whether this concerns environmentalism or protectionism, and whether disputes will be triggered. Now, if there is a violation of the GATT, so there is another WTO member that is under the assumption that its rights under the World Trade Organization have been violated by the EU carbon border adjustment mechanism, and that this violates the general agreement on tariffs and trade. The EU will have to try and justify this in a dispute if it wants to uphold the carbon border adjustment mechanism by invoking the exceptions in Article 20. So countries are allowed to have policies in place that deviate from WTO rules, but under strict conditions. So the chapel of Article 20 says, subject to the requirement that such measures are not applied in a manner which would constitute the means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or at this guy's description of international trade, nothing in this agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures, and I only have a selection of sub-paragraphs here that are relevant in this case, which would be B, necessary to protect human, animal, plant, life, or health, or G, relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. I should mention that in the past, in past disputes, it has been very hard for WTO members to successfully invoke a WTO CAT, Article 20 exception with regard to the measure, often because it was decided that while the measure met one of these sub-paragraphs, it didn't meet the requirements of the chapel, so it was either a disguised description of trade or discriminatory in the end. Here, the EU could invoke these two sub-paragraphs because it could argue that the CBAM is really on the long run necessary to protect human, animal, plant, life, or health, or that it relates to the conservation of exhaustible natural resources. Now, in recent years, the sub-paragraph of article G has been much easier to meet. Why? Because first of all, relating to is an easier threshold to meet than necessary. And because the definition of exhaustible natural resources by previous panels on the upper body has been interpreted in a very broad manner, also to include, for instance, clean air as an exhaustible natural resource. So the EU could argue that CO2 emissions are relating to conserving the exhaustible natural resources in air. But again, we will see this only when a dispute is triggered in the system. I personally wouldn't be surprised to see a dispute triggered once this mechanism is introduced. Just because there are so many aspects to it and it affects really primary inputs and secondary inputs. So it has a very wide reach and it really will affect a lot of important industries. Also, with regard to the way it will be administered. That being said, at this stage, quite a lot of things about the mechanism are still unclear. So it really still depends on the final design of the mechanism and only then one could see how WTO law could be potentially violated with regard to importing industries. So finally, I briefly want to discuss potential consequences of the carbon border adjustment mechanism for the United States. So just a fun fact, the EU Green Deal got its name from the US New Deal which President Roosevelt has conceptualized in 1932 and it kind of has some similarities in the sense that as I said at the beginning, the EU Green Deal only has 24 pages and it's very broad. The call is clear. We want to go towards a decarbonized Europe by 2050. But the timeframe is really long and therefore you do not want to be bought down in technicalities and strict requirements and details and you do need flexibility. I want to just briefly contrast this also to the 2019 Green New Deal that was proposed by Alexandria Ocasio-Portez and Edward Markey which also combines Roosevelt's economic approach with renewable energy and resource efficiency and the whole idea of making the US carbon neutral. But unfortunately, that didn't make it. Nevertheless, there's quite a lot of parallels also with the Biden plan for clean energy revolution and environmental justice with the Green New Deal, for the US version of the Green New Deal. In essence, I would say that at present, the EU strategy seems to be more evolved although still vague. The finqueeness will come with the EU climate law and the establishment of this carbon border adjustment mechanism. That doesn't mean that the US doesn't have its own plans on how to make the global economy greener. And it's interesting here to look at some of the strategies set forward by the US trade representative Catherine Tai. So basically the US action plan with regard to contributing to a greener global economy is to provide negotiations on the environmental goods agreement. This is an agreement that is being negotiated within the framework of the World Trade Organization to reduce tariffs on so-called environmental goods. The whole challenge with this agreement is to agree on the list of environmental goods and to decide what environmental goods are. By experience, environmental goods, you could argue that they're environmental goods, but then where does the list end? So this is one of the issues where the environmental goods agreement has stuck and one of the plans of the new USCRs to revive these negotiations. What also is on the plan is really to negotiate trade obligations that protect forests and oceans. So you can think about fishery subsidies and valuations and that I think are parts where big progress can be made. Another quite controversial but hopefully progressive idea is to revise W2 subsidy rules to encourage investment in clean energy infrastructure and also innovate research development and renewable energy resources. However, the US has also said that USCR has also said that it really wants to exercise restraint on the introduction of a carbon border adjustment mechanism itself. So it is unlikely that the US will have a similar mechanism in place anytime soon. Now, last but not least, I very briefly want to touch upon potential consequences for US industries. And basically, if the EU institutes this carbon border adjustment mechanism, it's right now likely only to cover a few carbon-intensive products like steel and cement and not immediately threatening to US imports. But there are definitely loud complaints from China, India, and others that do import these products into the EU. However, if you expand the C-Bam to manufacturers, it will be more problematic and that can provoke more kinds of restrictions because then you will really look at the inputs and the way in which products were produced and processed and that's where you really venture into the tricky area. So I hope this kind of gives you some insights about what the actual view is with the EU Green Deal with regard to the strategy, the key forms of legislation, the carbon border adjustment mechanism that basically wants to extend the European emission trading system to imports of particular products from abroad, and how that might be problematic with regard to the laws of the World Trade Organization and last but not least, whether the US plans to have such a mechanism in place and how such a carbon border adjustment mechanism might affect US industries. I want to really thank you for your attention. I wish you a healthy and green summer and I really hope that we have a chance to meet each other again in person, in the month when it's possible. Thank you very much for your attention. Thanks for that great talk, Dr. Marhol. So for our listeners, we have a few minutes to ask some questions. As a reminder, for those of you who are watching on the live stream through the VLS website, you can click on the icon at the bottom of the video which will bring up the chat box where you can add your question. And if you're watching on Facebook, on the Facebook live stream, add your question to the comment box below and we'll try to get to as many as possible. A few questions to start things off, Dr. Marhol. Could you speak a little bit about the distribution of greenhouse gas emissions across sectors in the European Union and in particular how transportation emissions are factored into the new deal? Yeah, of course. So thank you for your question. So the EU tries to, in the framework of the EU Green Deal, but also in connection with its nationally determined contributions in the framework of the Paris Agreement, really divide its allocation between, or its carbon emission reduction targets between ETS covered industries and non ETS covered industries. So the ETS covered industries would be those industries that are carbon intensive and really the main energy industries. And the non ETS industries also cover those sectors such as in fact, might be debatable, but let's say waste management and also transportation, et cetera. So they're not necessarily, they don't fall under the ETS, but they are kind of calculated towards for instance, the nationally determined contributions that the EU has submitted as part of the wider Paris Agreement climate goals. Now, another interesting feature is that with regard to these nationally determined contributions, you see that there is really now one big EU goal, EUI goal with regard to emission reductions where the EU tries to per country decide what each EU member state can do with respect to ETS covered and non ETS covered emission reductions and to submit that whole goal as one target basically. Another thing that had to be kind of recalculated in this respect is that the UK is no longer part of this and so the UK, which is actually responsible for a large part of emission reductions, their part of the share had to be absorbed by separate EU member states. So there's a regulation in place and there you can really quite in detail see what sectors and what countries are covered and how that is basically allocated for EU member state. Our products that are being imported from a greater distance and therefore have more greenhouse gas emissions from transportation, are those treated and are they disfavored under the trade mechanisms that you described at the cross border? Not necessarily so. So, so far this is unclear and that remains quite vague. There is a calculation mechanism on how the CBAM allowances are calculated. So how energy intensive a product is, but it's unclear and still quite vague to what extent for instance transportation of something from very far away is also allocated in that. But you could say that it can be since it both covers primary energy production but also what goes into manufacturing a particular product. So it seems that the EU really wants to look at the whole picture holistically and take that into account. Now, the issue is of course that products that are more often from further away will often be also from developing countries that have done more trouble in meeting those standards and will be disadvantaged in this sense. That's been a big issue in the United States. For instance, with the clean fuel standard in California and the desire to do kind of full lifecycle greenhouse gas emissions accounting, including land use, transitioning forest to farmland to grow corn for ethanol, for instance, and then weather places like Brazil that produce a lot of ethanol would be at a disadvantage as compared to American companies producing ethanol because there'd be less transportation. So that's something there's been a lot of litigation about in the US with the commerce clause. And so it's interesting to think about how that might play out differently in an international setting like Europe where you don't have the same domestic commerce issues but you have a whole other set of trade issues in terms of not wanting to discriminate, so to speak against particular sources just based on location. Yeah, I think the whole issue with the carbon border adjustment mechanism is that really the goal of the EU is to make it WTO compatible. But since it has so many features and it really so much depends on the definite form that we'll have, it's very likely that we will only know later when particular industries in let's say developing countries are affected and will lobby their governments to start a dispute at the WTO and the WTO level. And therefore that only kind of remains to be seen. And this is also one of the criticism so far of the mechanism in the sense that it really leaves a lot of things open. And I am actually very curious because the final draft or the final version is supposed to be released mid July and only then we will really know what is possible and what is not possible, but that still doesn't show us the effects in practice which might be extremely far reaching if you think of all the industries that are covered and also the process and production methods that are covered by that. Well, maybe next year's hot topics we can compare notes between how far the EU has made it and how far we've made it here with the Green New Deal or Biden's climate plan. They all seem like they're sort of equally at the starting gate right now. So hopefully we'll have a lot more to talk about next summer. So that seems like a good place to end although I'm sure we could talk about this for a lot longer. Thank you so much, Dr. Marhold for that really interesting talk. And thank you to everybody who tuned in today. Our next hot topics lecture will be right here on July 1st at noon this Thursday and we hope you can join us then. Thanks everyone. Thank you so much. Thank you for having me.