The Member States of the European Union (EU) and the European Parliament announced on Tuesday (13) an unprecedented mechanism to obtain 'green' industrial imports in Europe, with a tax on carbon emissions linked to their production.

Called the "border carbon tax", although not exactly a tax, the unprecedented mechanism on this scale will be to apply the same EU environmental criteria, where industries buy their "rights to pollute".

The system will affect imports from sectors considered to be more polluting such as steel, aluminium, cement, fertilisers, electricity or hydrogen, the Bloc's European Council and Parliament said in a statement.

With the increase in the price of a tonne of CO2, the idea is to avoid "ecological dumping" that will lead industries to transfer production out of Europe and encourage the rest of the world to adopt European standards.

The "carbon adjustment at borders (CBAM) device will be a crucial pillar of European climate policies. It is one of the only mechanisms we have to encourage our business partners to decarbonize their industry," said MEP Mohammed Chahim (social democrat), a negotiator in the European Parliament.

In practice, the importer should declare emissions directly linked to the production process and, if they exceed the European limit, purchase an "emission certificate" with CO2 prices in the EU.

If there is a carbon market in the exporting country, the company will need to pay the difference.

The agreement also states that the mechanism will take into account "indirect" emissions.

The system will be applied progressively from October 2023, when importing companies should only start declaring product emissions.

The date for full implementation will depend on negotiations at the end of the week on other aspects of eu carbon market reform.

As the programme progresses, the EU will phase out the free emission quotas currently granted to European industries to cope with foreign competition.

MEPs want the end of quotas to begin in 2027 and for full deletion in 2032, while Member States propose a gradual abandonment between 2026 and 2035.

Source: GZH MUNDO