EU countries are supporting the bloc’s decision to impose a world-first carbon dioxide emissions tariff on imports of polluting goods.
While finer details of the plan still need to be specified in upcoming negotiations, the EU wants to introduce CO2 emissions costs on imports of steel, cement, fertilisers, aluminium and electricity, starting in 2026. The objective is to protect European industry from being undercut by cheaper goods made in countries with weaker environmental rules.
EU countries and the European parliament are racing to approve the rules this year, as a three-year transition phase for the levy would begin in 2023.
“It’s a major step forward in the fight against climate change,” French finance minister Bruno Le Maire said. “We’re making the effort to reduce carbon emissions in industry. … We don’t want these efforts to be of no avail because we import products which contain more carbon,”
The tariff is part of a package of EU climate change policies designed to cut the bloc’s emissions by 55% by 2030 from 1990 levels.
Significant investments from industry in green technologies like hydrogen and imposing higher CO2 costs on polluters are required to meet this goal. The border levy aims to create a “level playing field” by imposing the same CO2 costs on EU companies and those abroad.
The European parliament plans to confirm its position by July, meaning negotiations between parliament and EU countries on the final rules could begin after summer.
Ministers have not yet decided how quickly the border levy should replace the current free CO2 permits. The phasing out of those permits is a long conversation to be had, and ministers said it would be negotiated in separate talks on EU carbon market reforms. The issue of whether revenue from the CO2 levy will go into the EU budget will also be discussed later.
“The agreement leaves many questions unanswered,” said Parliament’s lead lawmaker on the policy, Mohammed Chahim, adding that he “cannot make any deal” without clarity on the free permit phase-out.
Chahim wants to end free CO2 permits by 2028. The commission proposed 2035, while some industries are lobbying to keep them.