It will consist of applying the same EU Environmental Criteria, where industrialists buy their “rights to pollute”
The member states of the European Union (EU) and the European Parliament announced on Tuesday that they agreed on an unprecedented mechanism to green industrial imports in Europe, taxing carbon dioxide (CO2) emissions linked to its production, such as steel or cement.
commonly called “carbon tax at borders” Although it is not exactly a tax, this unprecedented mechanism on this scale will consist of applying the same EU Environmental Criteria, where industrialists buy their “rights to pollute”.
The system will affect imports from sectors considered the most polluting such as steel, aluminum, cement, fertilizers, electricity or hydrogen, the European Council and the Community Parliament indicated in separate communications.
As a result of the rise in prices per ton of CO2, The idea is to avoid “ecological dumping” that leads industrialists to relocate their production outside of Europe and encourage the rest of the world to adopt European standards.
This “carbon border adjustment” (CBAM) scheme “will be a crucial pillar of European climate policies, it is one of the only mechanisms we have to encourage our trading partners to decarbonise their industry,” explained Mohammed Chahim MEP (Social Democrats), a European Parliament negotiator.
In practice, the importer must declare the emissions directly linked to the production process and, if these exceed the European limit, buy an “emission certificate” at CO2 prices in the EU.
If there is a carbon market in the exporting country, only the difference must be paid.
The agreement indicates that the mechanism will also take into account “indirect” emissions.
The system will be applied progressivelye from October 2023, when importing companies should only start declaring product emissions.
The date of its full commissioning will depend on talks at the end of the week on other aspects of the reform of the EU carbon market.
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As the program progresses, the EU will phase out free emission quotas hitherto granted to European industrialists to face foreign competition.
MEPs call for start the abolition of quotas in 2027 and end them completely in 2032, while Member States propose a phase-out between 2026 and 2035.