EU Council agrees on new first in the world carbon border tariff

The European Council has agreed on a new Carbon Border Adjustment Mechanism (CBAM) regulation. The tariff – the world's first of its kind – will be placed on carbon-intensive goods in an attempt to make sure that the EU’s efforts to reduce greenhouse gases emissions aren’t offset by imports.

The EU said in a newly released statement, that the measures are important for preventing ‘carbon leakage’ and that they are looking to encourage partner countries to establish similar carbon tariffs.

Sectors including cement, aluminium, fertilisers, electric energy production, iron and steel will all be affected. The measures will be phased in over three years starting from 2023.

The tariffs are a central component of the EU’s ‘Fit for 55’ package, a set of proposals that have been created to make sure that legislation is up to date with the EU’s Council and the European Parliament's long-term climate goals. These include a binding target of achieving climate neutrality by 2050, and an aim to cut emissions by 55% by 2030.

Read more: New partnership to accelerate hydrogen-fuelled aviation

In a statement, Bruno Le Maire, French Minister for Economic Affairs, Finance and Recovery said, “The agreement in the Council on the Carbon Border Adjustment Mechanism is a victory for European climate policy. It will give us a tool to speed up the decarbonisation of our industry, while protecting it from companies from countries with less ambitious climate goals.”

Although details have yet to be finalised, the Council said it foresaw a minimum threshold of €150 on the products it would tax. The statement also said that the CBAM would work alongside the EU’s current Emissions Trading System (EU ETS) and over time would come to replace the EU’s older mechanisms introduced to prevent carbon leakage.

Read more: Major aerospace players sign Sustainable Aviation Fuel pledge

Mohammed Chahim, who was steering the Parliament’s new tariff proposal, also said that he wanted to end free CO2 tariffs by 2028.

In February 2022 the EU and its member states agreed on efforts to accelerate the actions set out during the November 2021 COP26 climate conference. They said they would aim to work with global partners to stick to – and implement more quickly – the climate-saving initiatives, and said that human rights needed to remain at the centre of climate and energy diplomacy.

Back to Homepage

Back to Aerospace & Defence