EU makes non-European companies pay for CO2 emissions

The EU members and the European Parliament have agreed on introducing a CO2 tax for non-European companies. The new climate measure applies to the aluminum, steel, and fertilizer sectors and the hydrogen industry.

The so-called Carbon Border Adjustment Mechanism (CBAM) makes companies outside the EU pay for their CO2 emissions, just as European companies already do. It aims to combat unfair competition to protect European companies against players from countries with hardly or no emission restrictions.

Polluters pay

With the new mechanism, companies that import to the EU must pay the same carbon price as producers covered by the emissions trading system (ETS). It’s the only tool to encourage the industry worldwide to produce greener. So the directive makes polluters pay and gives the rest of the world a boost to do the same.

The new directive must ensure a level playing field and prevent companies from leaving the EU to countries that require less effort from them in the fight against climate change.

As of October 1st, 2023

The idea of such a border tax is not new, but last summer, it became concrete as part of the Green Deal to reduce CO2 emissions by 55% by 2030.

The new tax will take effect on October 1st of next year and is expected to yield 800 million euros. Moreover, from 2030, the mechanism may be extended to other ETS sectors, such as chemical installation or paper production.






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