Introduction of EU carbon border tax on electricity

, SEE Energy News

The European Commission is due to propose its carbon border adjustment mechanism on 14 July 14, a move designed to put EU companies on an equal footing with competitors in countries with weaker carbon policies. The proposal will take the form of a regulation setting up a carbon border adjustment mechanism authority, with the measure being phased in from 2023 and a full implementation from 2026.

It would apply to steel, iron, cement, fertilizers, aluminium and electricity. It will cover both direct emissions, those involved in the production which the producer has direct control over, including emissions from the production of heating and cooling consumed during the production process, and indirection emissions such as electricity consumed during the production process of goods.

The carbon border tariff will not apply to countries within the customs union – Iceland, Liechtenstein, Norway and Switzerland, However, the impact willmainly be felt in EU neighboring countries, Western Balkans among others. European Commission Vice-President Frans Timmermans said earlier that poorest countries could get some kind of exemption.

Each year, by the end of May, importers will be requested to report the amount of emissions embedded in the goods they imported into Europe in the previous year, plus the number of border levy certificates that they surrendered.

EU power plants and industrial facilities are required to buy permits from the EU carbon market to cover their emissions. The permit prices have soared to records this year and on Thursday was trading at 52 euros per ton of CO2. The European Commission has said that countries whose climate policy ambitions match those of the EU may be able to dodge the border fee.