“We have also provided for the future integration of processed products, such as cars,” he said. While the initial CBAM requirements will apply to only a few sectors, Canfin made it clear the EU parliament had many more in its sights. Canfin, without naming the US, made it clear that the CBAM was also part of the EU response, saying the aim was to make Europe “a sovereign green power”. The US has said the EU should develop its own incentives. President Joe Biden’s climate legislation contains hundreds of billions of dollars in incentives to green industries, which has been seen by some EU member states as an aggressive act that could undermine the attractiveness of the EU for green investment. The move must also be seen in the context of the row between the EU and the US over the Inflation Reduction Act. Russia faces its own sanctions and penalties based on its aggression in Ukraine, but could also be targeted by CBAMs. The US and the UK are considering how to respond, but the countries most affected by Europe’s moves are likely to be those with high-carbon export industries such as China, Turkey, India and potentially Australia. The move, announced as part of the EU green deal, a big push to meet the EU’s stringent climate targets, could be the first salvo in a global carbon trade war – or the first step towards an equitable global effort to cut greenhouse gas emissions in line with urgent scientific advice. This is a major step that will allow us to do more for the climate while protecting our companies and our jobs.” For the first time, we are going to ensure fair treatment between our companies, which pay a carbon price in Europe, and their foreign competitors, which do not. Pascal Canfin, chair of the EU parliament’s environment committee, hailed the move: “The agreement is a world first. That would render our climate action useless.” You will see European industry move elsewhere, to places where they don’t have to comply with strict norms, to emit CO 2 there. If other don’t do that – if they don’t comply with what they engaged to do under the Paris agreement – the risk of carbon leakage is huge. However, at first, there will be no financial or other penalties attached to the EU’s CBAM – companies will only be required to report on the emissions associated with the production of the goods they wish to sell.įrans Timmermans, vice-president of the European Commission, told the Guardian: “We’re going to ask a tremendous transformation from many parts of our industry. But if all goes according to plan, CBAMs will come into force on a trial basis from next October. The agreement is still provisional, and details remain to be ironed out by member states and other institutions.

Eu carbon tax