Proposal for a Regulation establishing a carbon border adjustment mechanism

Author (Corporate)
Series Details COM (2021) 564
Publication Date 14/07/2021
Content Type

Summary:

Legislative initiative tabled by the European Commission on 14 July 2021 establishing a new Carbon Border Adjustment Mechanism (CBAM). This is a text with EEA relevance.

Further information:

The European Commission first announced its intention to propose a CBAM in its Communication setting out the European Green Deal, applicable to selected sectors to reduce the risk of carbon leakage. The mechanism aims to ensure that the price of imports reflect more accurately their carbon content, should differences in levels of ambition worldwide persist. This measure is designed to comply with World Trade Organisation (WTO) rules and other international obligations of the European Union (EU).

The CBAM is seen as an alternative to the measures that address the risk of carbon leakage in the EU's Emissions Trading System (EU ETS), and it is meant to avoid that the emissions reduction effort of the EU are offset by increasing emissions outside of the EU through relocation of production or increased imports of less carbon-intensive products.

The draft law was unveiled by the European Commission on 14 July 2021, as part of the so-called Fit for 55 legislative package. The Council of the European Union adopted its general approach on 15 March 2022. The European Parliament's relevant committee adopted a preliminary position on 17 May.

Source Link https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2021:564:FIN
Related Links
Commentary and Analysis
Wikipedia: Carbon Border Adjustment Mechanism https://en.wikipedia.org/wiki/Carbon_Border_Adjustment_Mechanism
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Pinsent Masons: Out-Law News, 19/07/2021: European Commission outlines plan for carbon border adjustment mechanism https://www.pinsentmasons.com/out-law/news/european-commission-outlines-plan-for-carbon-border-adjustment-mechanism
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GMFUS: Policy Briefs, 03/09/2021: The EU’s Triangular Dilemma on Climate and Trade https://www.gmfus.org/news/eus-triangular-dilemma-climate-and-trade
Heinrich Böll Foundation: Analysis, 13/09/2021: The proposal for a Carbon Border Adjustment Mechanism fails the ambition and equity tests https://eu.boell.org/en/2021/09/13/proposal-carbon-border-adjustment-mechanism-fails-ambition-and-equity-tests
Oxford University: Practical Ethics, 14/09/2021: The Morality of Carbon Border Taxes https://blog.practicalethics.ox.ac.uk/2021/09/the-morality-of-carbon-border-taxes/
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EIAS: Op-Ed, 21/09/2021: Mitigating Opposition to the Carbon Border Adjustment Mechanism: Engaging BRICS and the Global South https://eias.org/op-ed/mitigating-opposition-to-the-carbon-border-adjustment-mechanism-engaging-brics-and-the-global-south/
Cambridge University: Cambridge Institute for Sustainability Leadership: Working Paper, October 2021: On the Borderline: The EU CBAM and its place in the world of trade https://www.cisl.cam.ac.uk/resources/publications/eu-cbam-and-its-place-world-trade
Plastics Europe: Knowledge Hub, October 2021: Position Paper - Carbon Border Adjustment Mechanism (CBAM) https://plasticseurope.org/knowledge-hub/carbon-border-adjustment-mechanism-cbam/
Italian Institute for International Political Studies (ISPI): Commentary, 05/10/2021: The Carbon Border Adjustment Mechanism: A Call for Cooperation on Carbon Pricing https://www.ispionline.it/en/pubblicazione/carbon-border-adjustment-mechanism-call-cooperation-carbon-pricing-32211
European Aluminium: Preliminary Assessment - Draft Regulation on the introduction of an EU Carbon Border Adjustment Mechanism (7 October 2021) https://www.european-aluminium.eu/media/3299/07-10-2021-european-aluminium_preliminary-views-on-draft-cbam-proposal-final.pdf
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Open Society Foundations: Voices, 21/10/2021: The EU Must Think Globally on Carbon Import Tax https://www.opensocietyfoundations.org/voices/the-eu-must-think-globally-on-carbon-import-tax
Peterson Institute for International Economics (PIIE): Policy Briefs, November 2021: Can EU carbon border adjustment measures propel WTO climate talks? https://www.piie.com/publications/policy-briefs/can-eu-carbon-border-adjustment-measures-propel-wto-climate-talks
European Centre for International Political Economy (ECIPE): Policy Briefs, November 2021: Europe’s Carbon Border Adjustment Mechanism: Time to Go Back to the Drawing Board https://ecipe.org/publications/europe-carbon-border-adjustment-mechanism/
Harvard International Review, 17/11/2021: The European Union, the Carbon Border Adjustment Mechanism, and Global Climate Leadership https://hir.harvard.edu/the-european-union-the-carbon-border-adjustment-mechanism-and-global-climate-leadership/
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E3G: Letters, 13/12/2021: EU’s Carbon Border Adjustment Mechanism — Joint NGO statement https://www.e3g.org/news/eu-carbon-border-adjustment-mechanism-cbam-joint-ngo-statement/
EPRS: Briefing, January 2022: ‘Fit for 55’ package: Carbon border adjustment mechanism - Initial Appraisal of a European Commission Impact Assessment https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2022)699473
Institute of International & European Affairs: Blog, 20/01/2022: CBAM: An EU Foreign Climate Policy https://www.iiea.com/blog/cbam-an-eu-foreign-climate-policy
CEPR: VoxEU: Article, 23/01/2022: Japan should lead the global effort to decarbonise: Reflections on the EU’s Carbon Border Adjustment Mechanism https://voxeu.org/article/reflections-eu-s-carbon-border-adjustment-mechanism
SP Global: Market Insights, 09/02/2022: CBAM may not work without policy adopted for steel exporters: webinar https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/metals/020922-cbam-may-not-work-without-policy-adopted-for-steel-exporters-webinar
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Carbon Market Watch: Opinion, 24/02/2022: CBAM: Exploring MEP Chahim’s draft report https://carbonmarketwatch.org/2022/02/24/cbam-exploring-mep-chahims-draft-report/
Ernst&Young (EY): Article, 04/03/2022: Carbon Border Adjustment Mechanism (CBAM) update and its impact on the EU cross-border imports https://www.ey.com/en_ch/tax/green-taxes/carbon-border-adjustment-mechanism
Institute for European Environmental Policy (IEEP): Publications, 07/03/2022: Summary for decision-makers: Four guiding principles for CBAM design and implementation https://ieep.eu/publications/summary-for-decision-makers-four-guiding-principles-for-cbam-design-and-implementation
French Institute of International Relations (IFRI): Brefings, 09/03/2022: The EU’s Carbon Border Adjustment Mechanism: A Piece in the Industry Decarbonization Puzzle https://www.ifri.org/en/publications/briefings-de-lifri/eus-carbon-border-adjustment-mechanism-piece-industry
European Environmental Bureau (EEB): Joint NGO statement on the Carbon Border Adjustment Mechanism (CBAM) ahead of the ECOFIN Meeting (10 March 2022) https://eeb.org/wp-content/uploads/2022/03/NGO-statement-on-CBAM-for-ECOFIN-meeting_March-2022.pdf
Tax Foundation, 18/03/2022: Russia’s Ukrainian War Could Impact EU Carbon Proposal Too https://taxfoundation.org/eu-carbon-border-adjustment-mechanism-cbam/
Heinrich Böll Foundation (Tel Aviv): Explainer, 21/03/2022: What is the EU’s Carbon Border Adjustment Mechanism and what does it mean for Israel? https://il.boell.org/en/2022/03/21/what-eus-carbon-border-adjustment-mechanism-cbam
Centre for Economic Policy Research (CEPR): VoxEU, 26/03/2022: The EU in search of a WTO-compatible Carbon Border Adjustment Mechanism https://voxeu.org/article/search-wto-compatible-carbon-border-adjustment-mechanism
EurActiv: Opinion, 31/03/2022: United States lawmakers are at a CBAM tipping point https://www.euractiv.com/section/energy-environment/opinion/united-states-lawmakers-are-at-a-cbam-tipping-point/
SP Global: Commodity Insights, 28/04/2022: EU carbon border charge threatens exports: AEGIS Europe https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/042822-eu-carbon-border-charge-threatens-exports-aegis-europe
Centre for Strategic & International Studies (CSIS): Analysis, 17/05/2022: The CBAM, Sectoral Averages, and the Need for Granularity https://www.csis.org/analysis/cbam-sectoral-averages-and-need-granularity
Clingendael: Alert, 24/05/2022: The CBAM effect: the world's response to the EU's climate stick https://www.clingendael.org/publication/cbam-effect-worlds-response-eus-climate-stick
EPRS: Briefing, May 2022: EU carbon border adjustment mechanism: Implications for climate and competitiveness https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2022)698889
EPRS: At a Glance, June 2022: EU carbon border adjustment mechanism https://www.europarl.europa.eu/thinktank/en/document/EPRS_ATA(2022)729462

News
EUObserver, 16/07/2021: EU carbon border tax to target imports from 2026 https://euobserver.com/climate/152460
TIME Magazine, 26/07/2021: John Kerry on Border Carbon Tax: The U.S. Doesn't Want to Push Others Away https://time.com/6084078/john-kerry-border-carbon-mechansim-cbam/
Reuters, 01/09/2021: EU's planned carbon border tax to impact Russia the most - study https://www.reuters.com/business/environment/eus-planned-carbon-border-tax-impact-russia-most-study-2021-09-01/
The Guardian, 28/10/2021: EU carbon border levy could sabotage climate goals, says thinktank https://www.theguardian.com/environment/2021/oct/28/eu-carbon-border-levy-could-sabotage-climate-goals-says-thinktank
Argus Media, 08/12/2021: Doubts persist on suitability of EU CBAM https://www.argusmedia.com/en/news/2281231-doubts-persist-on-suitability-of-eu-cbam
Politico, 23/12/2021: London mulls carbon border tax with an eye on Brussels https://www.politico.eu/article/carbon-border-tax-carbon-pricing-steve-barclay-carbon-leakage-cbam/
EurActiv, 11/01/2022: Lawmaker drafts ‘complete overhaul’ of EU carbon border levy https://www.euractiv.com/section/energy-environment/news/eu-lawmaker-drafts-complete-overhaul-of-carbon-border-levy/
RFI News, 20/01/2022: EU ministers mull climate policy, carbon border tax https://www.rfi.fr/en/eu-ministers-mull-climate-policy-carbon-border-tax
EurActiv, 15/02/2022: EU in balancing act over carbon border levy, industry concerns https://www.euractiv.com/section/energy-environment/news/eu-in-balancing-act-over-carbon-border-levy-industry-concerns/
EUObserver, 17/05/2022: MEPs raise ambition on EU carbon market reform https://euobserver.com/green-economy/154969

Official
EUR-LEX: SWD(2021)643: Staff Working Document accompanying the Proposal - Impact Assessment Report https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2021:643:FIN
EUR-LEX: SWD(2021)644: Staff Working Document accompanying the Proposal - Executive Summary of the Impact Assessment Report https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2021:644:FIN
EUR-LEX: SWD(2021)647: Staff Working Document accompanying the Proposal - Subsidiarity Grid https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2021:647:FIN
European Parliament: Legislative Observatory: Procedure File for Proposal on Carbon Border Adjustment Mechanism. 'Fit for 55 package' (2021/0214(COD)) https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2021/0214(COD)
European Parliament: Legislative Train Schedule: Carbon Border Adjustment Mechanism as part of the European Green Deal https://www.europarl.europa.eu/legislative-train/theme-a-european-green-deal/file-carbon-border-adjustment-mechanism
European Commission: DG Taxation and Customs Union: Green Taxation: Carbon Border Adjustment Mechanism https://ec.europa.eu/taxation_customs/green-taxation-0/carbon-border-adjustment-mechanism_en
European Commission: Better Regulation: Have Your Say: EU Green Deal (carbon border adjustment mechanism) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12228-EU-Green-Deal-carbon-border-adjustment-mechanism-_en
Norwegian Government: Letter, 02/07/2021: Carbon Border Adjustment Mechanism – Preliminary Norwegian Positions https://www.regjeringen.no/en/find-document/dep/FIN/anbud-konsesjoner-og-brev/Publications-in-English-or-translated-in/utvalgte-brev/2021/carbon-border-adjustment-mechanism-preliminary-norwegian-positions/id2865475/
European Commission: Press Release, 14/07/2021: European Green Deal: Commission proposes transformation of EU economy and society to meet climate ambitions https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3541
European Commission: Carbon Border Adjustment Mechanism: Questions and Answers (14 July 2021) https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_3661
EPP EP Group: Newsroom, 21/12/2021: De-carbonise, not de-industrialise Europe https://www.eppgroup.eu/newsroom/news/de-carbonise-not-de-industrialise-europe
Norwegian Government: Letter, 02/03/2022: Carbon Border Adjustment Mechanism – Norwegian Positions https://www.regjeringen.no/en/find-document/dep/FIN/anbud-konsesjoner-og-brev/Publications-in-English-or-translated-in/utvalgte-brev/2022/carbon-border-adjustment-mechanism-norwegian-positions/id2902803/
Council of the European Union: Press Release, 15/03/2022: Council agrees on the Carbon Border Adjustment Mechanism (CBAM) https://www.consilium.europa.eu/en/press/press-releases/2022/03/15/carbon-border-adjustment-mechanism-cbam-council-agrees-its-negotiating-mandate/
European Parliament: Press Release, 17/05/2022: CBAM: MEPs push for higher ambition in new carbon leakage instrument https://www.europarl.europa.eu/news/en/press-room/20220516IPR29647/

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