Since 22 July, the European Commission has been inviting stakeholders in the EU and the rest of the world to give their views on the Carbon Border Adjustment Mechanism.
Published in December 2019, the European Commission's Green Deal noted that, in order to balance differences in levels of climate ambition around the world and ensure a level playing field for its producers, the institution would consider the creation of a Carbon Border Adjustment Mechanism (CBAM) (see EUROPE 12439/14).
By ensuring that the price of imports more accurately reflects their carbon content, it would reduce the risks of “carbon leakage”, production being transferred outside of the EU, and the replacement of European products by “dirtier” imports.
This ‘carbon tax’ would also contribute to the financing of the EU budget as part of the European Recovery Plan (see EUROPE 12532/2).
The mechanism would be linked to carbon pricing within the EU through its Emissions Trading Scheme (ETS). The introduction to the public consultation states that It might even be an alternative to the free allocation of these allowances, or to the offsetting of any increases in electricity costs.
The European Commission also raises the question of how effective the CBAM is. Do stakeholders believe that it will encourage the deployment of less carbon-intensive technologies? Will it result in a change in consumption patterns in the EU?
The institution is also interested in the scope of this mechanism, which could go as far as taking into account indirect emissions involved in the production of imported products, such as those related to electricity or transport, or even emissions from the entire value chain of the product.
There are also questions over the establishment of a benchmark for estimating the carbon footprint of these products.
Finally, alternatives have been suggested, since stakeholders might, for example, prefer regulatory means such as product performance standards or an extension of the ETS over imports, thereby implying that foreign producers/importers buy emission allowances.
The European Commission also mentioned exemptions to the mechanism, which could be considered specifically for developing countries.
The online public consultation will run until 28 October: https://bit.ly/3fWho4v (Original version in French by Hermine Donceel with Damien Génicot)