The Europe Jacques Delors institute published its position on the Carbon Border Adjustment Mechanism (CBAM) on Thursday 8 July, 6 days before the publication of the European Commission’s proposal on this subject.
The authors of the report—Pascal Lamy, Geneviève Pons and Pierre Leturcq—draw up a series of recommendations summarised by 3 ‘Ds’: diplomacy, dialogue, and design.
They consider that the EU will have to make efforts to get the international community to adhere to the new CBAM. “The EU must explain to its international partners that the logic behind the CBAM is purely environmental”, the authors say. This concern was shared by the think tank Germanwatch (see EUROPE 12748/8).
The authors also make suggestions on three major elements:
Allocation of free allowances. They regret that the end of free allocations in the Emissions Trading Scheme (ETS) is not mentioned in the leaked Commission document.
On this point, both the CBAM and the ETS draft plan to tackle free allowances in one way or another. Rather than abolishing them, the former provides for a reduction in the number of CBAM certificates to be surrendered by importers of products in the same category as those benefiting from free quotas on the internal market (see EUROPE 12733/9). The second (ETS) does envisage an end to free allocation of allowances for sectors covered by the CBAM, according to the preparatory document (see EUROPE 12752/1).
The Europe Jacques Delors institute is not alone in its concerns. In a report published on 7 July, the Bellona Foundation stresses the need to abolish free allowances for companies as soon as possible. “The later this happens, the later Europe starts in the race to innovate”, Suzana Carp, director of policy strategy at Bellona, told EUROPE.
Treatment of the least developed countries. According to the state of the art, the authors denounce the lack of differentiated treatment for the least developed countries. They advise an exemption system in line with World Trade Organization (WTO) rules that does not “unfairly punish the most vulnerable because their climate strategy is less ambitious”.
Use of income. The Europe Jacques Delors institute considers that revenues from the CBAM should be used for climate purposes only and not for the general EU budget. They suggest “redistributive logic via the financing of international funds in order to support decarbonisation in countries most affected by CBAM”.
Bellona also advocates that the resources linked to the mechanism should “support investments for decarbonisation, in the EU and beyond”. (Original version in French by Léa Marchal)