On February 5, 2021, the Committee on Environment of the European Parliament adopted a resolution to expand the scope of the future carbon tax (the so-called Carbon Border Adjustment Mechanism).
58 members of the Committee on Environment voted for the corresponding draft resolution, 8 were against, and 10 abstained.
Now, according to the document, along with the imported products of the electric power, cement, iron and steel, and chemical industries, the oil refining, pulp and paper industry, and aluminum industry goods imported to the EU territory should be covered by CBAM. These sectors of the economy cumulatively generate 94% of all CO2 emissions in the European Union.
In the opinion of the majority of members of the Committee on Environment, levying the carbon tax on these imported goods will enable the prevention of the so-called carbon leakage – the transfer of climate-harmful production facilities from the EU to countries that do not strive for a radical reduction in greenhouse emissions. In addition, CBAM will stimulate such countries to decarbonize their own economies, as stipulated by the Paris Agreement.
CBAM will become a part of a wider European industrial strategy
It is assumed that the rate of the carbon tax will be tied to the value of the EU greenhouse emission quotas (the EU Emissions Trading System). Thus, CBAM will become a part of a wider European industrial strategy, and will apply to all imports of products and commodities covered by the emissions trading system.
The European Parliament will consider the resolution supported by the Committee on Environment at its plenary meeting on March 8-11. The European Commission is expected to present its proposals on the format for the introduction of CBAM in the 2nd quarter of 2021.
CBAM is scheduled to get rolling no later than January 1, 2023.
Earlier, Vice President of the European Commission Frans Timmermans called the introduction of a carbon tax a key factor for the survival of European industry. “It’s a matter of life and death for our industry. If other countries do not move towards reducing greenhouse gas emissions, we must protect the European Union from distortions of competition and from the risk of carbon leakage,” he said.