The European Parliament and EU member states announced on Tuesday 13 December that they have agreed to adopt an unprecedented mechanism aimed at greening industrial imports from Europe by charging duties on the carbon emissions associated with their production.
What if carbon rationing could be “on demand”?
called carbon cap tax Although not a tax as such, an unprecedented device on this scale would consist of applying European carbon market standards to imports from twenty-seven, whereby EU manufacturers would have to “buy some ‘right to pollution’.
sequel after announcement
Avoid “environmental dumping”
The European institutions indicated in two separate press releases, after long night negotiations concluded early in the morning, that the mechanism would target the most polluting sectors (steel, aluminum, cement, fertilizers, electricity but also hydrogen). With the price per ton of carbon dioxide rising, the idea is to avoid a “environmental dumping” Which would see manufacturers move their production outside of Europe, while encouraging the rest of the world to adopt European standards.
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This device from“Adjusting carbon limits” (CBAM in English) “It will be a mainstay of European climate policies, it is one of the only mechanisms we have to incentivize our trading partners to decarbonize their industry”explained MP Mohamed Shaheem (S&D, Social Democrats), the parliament’s negotiator.
In practice, the importer must declare emissions directly related to the production process, and if these emissions exceed the European standard, obtain emission certificate to the price of carbon dioxide in the European Union. If there is a carbon market in the exporting country, it will only pay the difference. According to the agreement, the device will take into account emissions “not directly”those generated by the electricity used to produce imported products.
The testing period will begin in October 2023, during which importing companies simply have to report their obligations. The timetable for effective implementation of the plan, which will be gradual, will depend on further talks at the end of the week about the rest of the EU’s carbon market reform, at the heart of the European climate plan.
sequel after announcement
So, like this “border adjustment” Their power will grow, and the EU will gradually eliminate the free emissions quotas hitherto reserved for European industrialists to allow them to face competition from outside Europe.
The rate at which these free quotas will be abolished and the possibility of providing alternative aid to European exporters, so as not to put them at a disadvantage in the global market, is still a matter of intense debate.
Are we (still) free to pollute?
MEPs are calling for a very gradual abolition of free quotas from 2027, before their complete disappearance in 2032, when the Institutional Capacity Building Agreement comes into full force. States advocate very progressive elimination between 2026 and 2035.
This is a crucial point: By treating imports and domestic production on an equal footing, Brussels considers it is complying with the rules of the World Trade Organization (WTO) and fends off accusations “protectionism”.