CO2 customs: How the border tax is supposed to save the climate

EU finance ministers recently agreed on the introduction of the Carbon Border Adjustment Mechanism. What the rule means.

from Theresa Kopper

The EU finance ministers have agreed on the introduction of a CO2 tariff. This is a further step towards a fair climate policy, as Austria’s Finance Minister Magnus Brunner stated.

Goal: Comparable costs

With the so-called Carbon Border Adjustment Mechanism (CBAM) – in German border adjustment mechanism for carbon dioxide – manufacturers outside the EU should pay if they want to sell goods in the Union that produced emissions. Initially, this should apply to cement, aluminum, electricity, fertilizers, iron and steel. The aim of the regulation is to create comparable costs for imported goods and goods produced in the EU. Currently, EU manufacturers already have to pay for the emission of climate-damaging gases such as CO2 through certificates through the emissions trading system.

Fit for 55

The CO2 prices for foreign manufacturers are to be based on these emission certificates in the future. According to plans, the regulation will be implemented from 2026. However, before that, the EU countries still have to agree on a planned reform of emissions trading.

CBAM is part of the EU’s “Fit for 55” package. The proposed laws are intended to help countries become carbon neutral by 2050.

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