Brussels, 23 August 2021 (TDI): The new proposal adopted by EU Commission called the Carbon Border Adjustment Mechanism (CBAM) levies a carbon tax on a selected range of imports as a part of the ambitious EU Green Deal. The initiative will discourage carbon emissions on a global scale and direct the global industry away from carbon-intensive modes of production as well as “carbon leakage”.
Carbon leakage — the carbon-intensive production outside Europe due to low tax standards by Europe-based companies —can undermine the EU’s climate change agenda. Through the CBAM in correspondence with the World Trade Organization and EU, there will be equalization of a carbon price on European domestic and imported products which will encourage “international partners to take steps in the same direction.”
The program will start with selected goods and over time will be applied to high-risk carbon leakage products made of iron, steel, and other heavy industry materials. Starting from 2023, the program will be fully operational by 2026. By that time, “EU importers will have to declare annually the number of goods and the number of embedded emissions in the total goods they imported into the EU in the preceding year.”
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