It's a flagship measure meant to accelerate the decarbonization of European industry. The European Union (EU), on Tuesday, December 13, agreed on the broad outlines of its Carbon Border Adjustment Mechanism (CBAM). The measure will make it possible to tax imports from the most polluting sectors (steel, cement, fertilizers, and so on), coming from countries with less stringent environmental standards. The idea is to avoid "environmental dumping" or "carbon leakage" – which would see manufacturers relocate their production outside Europe – while encouraging the rest of the world to increase its efforts to reduce greenhouse gas emissions.
"The EU is the first trading area in the world to put a carbon price on its imports. We have been talking about this for more than 20 years. This is a historic agreement for the climate," said Pascal Canfin, Renew MEP and chairman of the European Parliament's Environment Committee. "This is the best that could come of this trilogue, to ensure that products imported into Europe are subject to the same carbon price as if they had been produced in Europe," agreed Thomas Pellerin-Carlin, director of the Jacques-Delors Institute's energy center.
Level playing field
Still, the agreement found between the Commission, member states and the Parliament is not a resolution to every issue. Major points still to be discussed in relation to this measure, which is closely linked to the reform of the carbon market, will be addressed during another trilogue on Friday and Saturday. The CBAM is a part of a vast legislative arsenal (called "Fit for 55") being negotiated to enable the EU to meet its climate targets: to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 in order to achieve carbon neutrality by 2050.
How the CBAM will work has now been established. The tax will force importers of non-member states' goods into the EU to buy certificates to cover the direct CO2 emissions caused by these products. It is set to create a level playing field between foreign companies and European companies, which have to buy the "right to pollute" on the EU carbon market.
If a carbon price already exists in a non-member country, importers will only pay the difference. "China, for example, has already introduced a carbon price, which is still lower than that of the EU but which could increase. The hope is that every country will do the same", said Thomas Pellerin-Carlin. Only countries with the same climate ambitions as the EU will be exempted.
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