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EU approves carbon tax on imports of polluting products

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Brussels on Tuesday approved a carbon border tax targeting imports of polluting products such as steel and cement, a device the EU executive considers essential to support the block industry.

The European Parliament and EU Member States announced on Tuesday 13 December that they had adopted an unprecedented mechanism aimed at greening industrial imports from Europe by charging for the carbon emissions linked to their production.

Commonly called “carbon border tax” although it is not a tax as such, this device will subject imports in several sectors (steel, aluminum, cement, fertilizer, electricity, but also hydrogen) to environmental standards. of the EU, they said in two separate statements.

With the soaring price of a ton of CO2, the idea is to avoid “ecological dumping” which would see manufacturers relocate their production outside Europe, while encouraging 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 incentivize our trading partners to decarbonise their industry”, explained MEP Mohammed Chahim (S&D, Social Democrats), negotiator for Parliament.

In practice, the importer will have to declare the emissions directly linked to the production process, and if these exceed the European standard, acquire an “emission certificate” at the price of CO2 in the EU. If a carbon market exists in the exporting country, it will only pay the difference.

Test period from 2023

According to the agreement, the device will take into account “indirect” emissions, those generated by the electricity used for the production of imported products. A test period will begin in October 2023, during which importing companies will simply have to report their obligations.

The timetable for the effective implementation of the system, which will be gradual, will depend on subsequent talks at the end of the week on the rest of the reform of the EU carbon market, at the heart of the European climate plan.

Thus, as this “adjustment at the borders” gains momentum, the EU will gradually eliminate the free emission quotas allocated until now to 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 alternative aid for European exporters, so as not to put them at a disadvantage on the world market, are still the subject of fierce discussions.

MEPs are calling for a very gradual abolition of free quotas from 2027, before their complete disappearance in 2032, when the CBAM would fully come into force. States defend a very gradual elimination between 2026 and 2035.

This is a crucial point: by treating imports and local production equally, Brussels believes that it remains within the rules of the World Trade Organization (WTO) and counters the accusations of “protectionism”.

With AFP and Reuters

France 24-Trans

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