The countries in the European Union agreed on Dec. 13 to adopt a scheme to impose a carbon border tariff. It will apply to imports of polluting goods such as steel, iron, cement, fertilizers, aluminum, and electricity. The deal also includes imported hydrogen.
The Carbon Border Adjustment Mechanism (CBAM), which is the first mechanism to support European industries in their decarbonization efforts, will cover imports from the EU’s 27 member states, and will first target the highest polluting products.
The deal will require both domestic and overseas industries to buy certificates to cover their carbon emissions. Companies outside the European Union already have to purchase permits from the bloc’s carbon market when they pollute.
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“CBAM will be a crucial pillar of European climate policies,” said Mohammed Chahim, a member of the European Parliament from the Netherlands, in a statement released by the European Parliament. “It is one of the only mechanisms we have to incentivize our trading partners to decarbonize their manufacturing industry.”
The new policy aims to ensure that EU companies are not undercut by cheaper goods coming from countries with less developed environmental rules.
The law’s start date will be decided later this week in negotiations on a reform of the EU carbon market. The test period for the agreement will start in October next year, during which importing companies will have to report their CO2 emission obligations.
The newly introduced tariff is part of a package of EU policies in line with the bloc’s target to cut emissions to 55% by 2030 from 1990 levels.
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