The European Union launched the first phase of the Carbon Border Adjustment Mechanism (CBAM) – the first mechanism in the world aimed to impose CO2 emissions tax on imported iron, aluminium, cement, electricity, fertilizers and hydrogen.
The EU will not begin collecting any CO2 emissions charges at the border until 2026. This marks the start of an initial phase of the CBAM when EU importers will have to report the greenhouse gas emissions embedded during the production of imported volumes of iron and steel, aluminium, cement, electricity, fertilizers and hydrogen.
Importers will from 2026 need to purchase certificates to cover these CO2 emissions to put foreign producers on a level footing with EU industries that must buy permits from the EU carbon market when they pollute.
European Economy Commissioner Paolo Gentiloni said the aim was to encourage a worldwide shift to greener production and to prevent European manufacturers relocating to countries with lower environmental standards. It is also meant to prevent them from losing out to foreign competitors while they invest to contribute to meeting EU targets to cut the EU’s net emissions by 55 % by 2030 from 1990 levels.