The EU prepares to impose a carbon tax at the border
The European Council announced that a conditional consensus was reached in the negotiations on the Carbon Border Regulation Mechanism (CBAM) between the member states and the European Parliament (EP) negotiators.
Consequently, a mechanism will be established to match the carbon price paid for EU products with the carbon price paid for imported goods under the EU Emissions Trading System (ETS).
NEW OBLIGATIONS FOR IMPORTING COMPANIES
With this mechanism, companies that import into the EU will have to buy CBAM certificates to pay the difference between the carbon price paid in their manufacturing country and the carbon price in the EU.
The new app will encourage non-EU countries to raise their climate targets. Only countries with the same climate objective as the EU will be able to export to the EU without obtaining CBAM certificates.
The new rules will prevent production from moving from the EU to countries with softer environmental and climate policies. CBAM, which will be the first law on this subject, will be designed to fully comply with the rules of the World Trade Organization (WTO). CBAM will be effective as of October 1, 2023.
In this framework, a limited transitional period will apply, which includes the importer’s information on his obligations. The completion date of the transition process will be clarified in future negotiations.
FREE PERMITS TO BE WITHDRAWN FOR THE RELEASE OF GREENHOUSE GASES
CBAM will cover similar iron or steel products, such as screws and bolts, along with iron, steel, cement, aluminum, fertilizers, electricity and hydrogen. Permits for companies in these sectors, which receive free greenhouse gas emission limits under the EU’s emissions trading system, will also be removed.
The CBAM agreement will be formally adopted after other relevant issues are resolved. For the regulation to enter into force, it must be officially approved by the EU countries and the EP.
With the Border Carbon Regulation Mechanism, the EU aims to monitor and reduce imports of goods with a high carbon footprint from countries that do not have a carbon pricing system. (AA)
Source: Sozcu
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