Friday

29th Mar 2024

Lead MEP says carbon border tax money must help poor nations

  • Under EU Commission plan, the carbon border tax, due to enter into force in 2026, will target certain goods produced in third countries with lower environmental standards (Photo: European Commission)
Listen to article

The revenues from the EU's proposed carbon border tax should be used to support the decarbonisation of least-developed countries, a leading MEP has proposed in a draft report leaked to the press on Wednesday (5 January).

The so-called carbon border adjustment mechanism (CBAM), which will set a new levy on imports of iron, steel, cement, fertiliser, aluminium, and electricity, is expected to provide €1bn per year once it is fully implemented.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In a draft report from the European Parliament environment committee, Dutch centre-left MEP Mohammed Chahim has called for the mobilisation of these resources to help support poorer nations' climate efforts.

The text excludes the granting of any exemptions and, instead, it states that "financial support shall be provided to support least-developed countries' efforts towards the decarbonisation of their manufacturing industries".

"We need to avoid CBAM affecting LDC's [least-developed countries] disproportionally. Direct exemptions would however be the wrong signal," Chahim tweeted on Wednesday, arguing that this mechanism should foster cooperation rather than confrontation.

He added that only trade partners with "explicit" carbon pricing policies in place would benefit from certain exemptions under the CBAM.

The report, which is a response to the European Commission proposal presented last July, is seen as a complete overhaul of the initial text.

Under the EU executive's plan, the carbon border tax, due to enter into force in 2026, will target certain goods produced in third countries with lower environmental standards.

But Chahim's report calls for an earlier implementation and a wider scope of imports, with basic chemicals, polymers, and hydrogen added to the list of products covered by the new levy.

Additionally, a transitional period designed to help businesses adapt to the system has been shortened from two to one year and the deadline to phase out free allowances has been set to the end of 2028 — eight years earlier than in the commission proposal.

Under the cap-and-trade Emission Trading System, free permits help industry, aviation and, in some countries, the electricity sector, remain competitive against rivals based in third countries.

But the commission's plan to phase out free allowances between 2026 and 2035 has been criticised by green groups, which accused the EU executive of protecting carbon-intensive industries from the 'polluters pay' principle.

Accelerating the phase-out of free allowances by end of 2028 instead of 2035 has been welcomed by NGOs, such as German Watch, which sees it as "[a] clear improvement and important step for industry transformation".

Another significant change made in the report is the creation of a European CBAM Authority, which would be responsible for verified declarations of emissions and certificates for importers.

According to Pierre Leturcq, policy analyst of the Institute for European Environmental Policy, this proposal answers "the risk of circumvention" arising from a decentralised system of national authorities.

This would prevent foreign companies from introducing their products into the EU market through those member states whose administrations have the lowest capacity to control emission declarations, he said.

Besides accelerating global climate action, the CBAM aims to prevent businesses from transferring production to third countries with less strict climate rules - dubbed 'carbon leakage'.

EU carbon border tax to target imports from 2026

The European Commission wants to impose an import levy on certain goods produced in third countries with lower environmental standards, from 2026. From 2023 to 2025, importers will only have to report emissions embedded in their goods.

MEPs agree carbon border tax - heavy industries protected

Green groups warned that if heavy industry continues to receive free allowances even after a carbon border levy is in place, this would essentially be a double subsidy for those sectors. "The European Commission must correct this," the WWF warned.

EU unveils plan to repay Covid recovery-fund borrowing

The European Commission has presented three new sources of revenues for the EU´s coffers aimed at repaying the emergency coronavirus recovery fund and supporting vulnerable households in the transition towards climate neutrality.

Investigation

Macron's carbon border tax - why hasn't he done anything?

The French president has repeatedly said an EU border tax on carbon emissions is 'crucial'. However, his civil servants have yet to send Brussels a single proposal on how such a levy would work.

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us