The European Union announced on Tuesday the adoption of a mechanism that requires the imports of the industrial bloc to submit to environmental standards by imposing financial payments on the carbon emissions associated with their production.
The agreement, known as the Carbon Limit Adjustment Mechanism (CBAM), will include industrial imports from the bloc’s 27 countries and first target the most polluting products.
“CBAM will form an essential pillar of European climate policies,” said Member of Parliament for the Netherlands, Mohamed Chahim, in a statement released by the council.
“It is only one of our mechanisms to incentivize our trading partners to decarbonize their industrial sectors,” he added.
He added that it would allow the European Union to “implement the ‘polluter pays’ principle in our industries”.
The agreement will initially cover certain products in sectors that depend heavily on carbon such as steel, cement, fertilizers, aluminum, electricity and hydrogen, according to the European Council.
He added that indirect emissions will also be introduced into the mechanism.
This means that in practice, the importer will have to declare emissions directly related to the production process, and if they exceed European standards, they will have to obtain an “emissions certificate” for the price of CO2 in the EU.
If the carbon market is in the exporting country, he will just cover the difference.
Under the initial agreement reached by member states on Tuesday, the mechanism will be subject to a testing period from October 2023 during which importing companies will have to declare their carbon emissions commitments.
The timeline for the plan’s actual implementation, which will be phased in, will depend on additional talks later this week on reforming the rest of the EU’s carbon market.
“The new bill will be the first of its kind,” the European Parliament said in a statement, adding that it was designed to comply with World Trade Organization rules in order to counter accusations of protectionism.
“This mechanism promotes the import into the bloc of products by non-EU businesses that comply with the high climate standards applied in the 27 EU member states,” said Czech Minister of Industry and Trade Josef Sekela.
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