On March 10, 2021, by a majority vote, the European Parliament supported the introduction of a carbon tax (the so-called Carbon Border Adjustment Mechanism (CBAM), which will protect European companies from cheap imports from countries that are not decarbonizing their economy.
According to the report of EP, 444 members of the European Parliament voted for the adoption of the relevant resolution, 44 voted down, and 181 abstained.
We would like to remind that earlier, on February 5, the Committee on the Environment of the European Parliament adopted a resolution to expand the scope of the “carbon” tax. Now, along with imported products from the electric power, cement, iron and steel, and chemical industries, CBAM should apply to oil refining, pulp and paper industry, and aluminum products imported to the EU territory. These sectors of the economy together emit 94% of all CO2 in the European Union.
CBAM is part of the EU Green Deal, according to which Europe aims to achieve climate neutrality by 2050. In addition, levying the carbon tax on these imported goods will allow preventing the so-called carbon leakage – the transfer of the climate-harmful production facilities from the EU to countries that do not strive for a radical reduction in greenhouse emissions. Moreover, CBAM will stimulate such countries to decarbonize their own economies, as stipulated by the Paris Agreement.
The European Commission is expected to present its proposals on the format for the introduction of CBAM in the 2nd quarter of 2021. The introduction of the carbon tax itself is scheduled no later than January 1, 2023.
CBAM will become part of a broader European industrial strategy
The amount of carbon tax will be tied to the cost of EU Emissions Trading System. Thus, CBAM will become part of a broader European industrial strategy. Its effect will apply to all imports and commodities subject to the quota trading system.
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 the risk of carbon leakage, “he said.