The European Commission will present its proposal for a Carbon Border Adjustment Mechanism (CBAM) on Wednesday 14 July, as part of its package “Fit for 55”. EUROPE had access to a preparatory document of the pending regulation (see EUROPE 12733/9).
According to an EU diplomat, the mechanism will apply to all companies, regardless of their country of origin. The European Parliament and several observers are calling for an exemption for the least developed countries.
Ukraine, which is among the countries that will be most affected by this mechanism, believes, for example, that states with a full association agreement with the EU should be exempted or given preferential treatment (see EUROPE 12723/10).
The Commission considers that it should instead support the most vulnerable countries in introducing a carbon price system. “We need to develop green alliances with various partners. [...] We will not need to use the CBAM if countries increase their climate ambitions”, an EU source said on Monday 5 July.
The Commission excludes the various forms of export rebates that could be put in place for certain companies or countries.
In addition, it plans to revise its Emissions Trading Scheme (ETS) to phase out the allocation of free allowances to companies whose sectors are covered by the CBAM. This measure is being called for on the international scene to ensure at least fair competition between European and other producers.
Criticism
Many international actors have spoken out against the introduction of the CBAM. On Monday 5 July, the think tank Centre for European Reform (CER) published its vision of the tool and made some recommendations.
The authors believe that the CBAM will disadvantage small and new businesses because of the heavy administrative burden it will entail. They advise the Commission to consider funding for training, and to cover the costs associated with this burden.
Finally, according to the CER, the least developed countries should be exempted from the mechanism. As an alternative to this exemption, they propose to introduce a minimum import volume threshold below which the CBAM does not apply. This, they argue, would ensure that developing countries that export only small quantities would not be affected. (Original version in French by Léa Marchal)