What is in the draft with which the European Commission intends to present the carbon tax, or carbon border tax
The precise name and adjustment mechanism of imported emissions, or carbon border adjustment mechanism (Cbam). It is a tax designed to protect European industry in the process of decarbonisation from those external competitors that are not subject to the very strict climate objectives of the Union.
In practice, it will not be possible to use a more polluting non-EU supplier without incurring the surcharge, and extra-European producers will not be able to flood the market with products that are cheaper but created with less attention to the environment. For example, a steel mill like the former Ilva di Taranto – in full ecological transition – should not worry about unfair competition.
Once the CBAM is fully operational (we are talking about 2030) the Commission estimates that it will bring € 9 billion a year into the coffers of Brussels. The document outlines a gradual introduction starting in 2023 to allow companies to adapt and minimize the impact on trade.
The proceeds of this tax will finance the Next Generation EU plan, the architecture of loans and grants from which the money of the Recovery and Resilience Plans of European countries comes. It is one of the many measures that the Commission will present today, together with a reform of the European emissions market (ETS), stricter standards for emissions and perhaps the proposal for a pan-European tax on kerosene.
The project had piqued John Kerry ‘s interest, the US climate czar. It is the kind of protectionist measure that can come in handy in the tug-of-war with China but which, painted green, can also appeal to the left. “President Biden, I know, is particularly interested in evaluating the border adjustment mechanism,” Kerry said in an interview with Bloomberg, echoing Trade Representative Katherine Tai . “He wants to look into it and see if it’s something we need to implement,” the envoy added on that occasion. How does it work
The idea behind the carbon tax, in harmony with European plans, is to catalyze the ecological transition process. There are two main problems: not all industries can do without burning fossil fuels, and a company can get around the surcharge by moving polluting operations out of Europe, or by importing cheaper goods because they are produced abroad under less emission regulations. stringent.
These are the reasons why the European Emissions Trading System (ETS), in force since 2005, directly favors or excludes European energy-intensive companies, because it would be unthinkable to force them to emigrate or make them succumb under the combined attack of taxes on emissions and unfair competition. On the other hand, the sustainable transition and emission reduction targets mean that this situation cannot last – stricter rules increase the risk of carbon leakage, the “carbon leak” that derives from resorting to less eco-responsible companies. .
In essence, CBAM is a duty on products imported into Europe from countries with looser emissions regulations, designed to avoid carbon leakage, protect the European market from unfair competition and incentivize other countries to raise their climate ambitions. According to Commission Executive Vice President Frans Timmermans , “if every nation fulfilled its commitments [enshrined in the] Paris agreements, [the tax] would never be applied.” Who is there
The international question is open. The real challenge, in fact, will be fought on the global front. As the EU leads the charge in the fight against climate change, the prospect of a carbon tax modeled on European ambitions has already made a multitude of EU trading partners stand on end: China, Brazil, South Africa and India have already spoken of “discriminatory” measures, while Australia has accused the EU of wanting to “put shutters around its economy”.
America also seemed to have a lot to say, at least until a few weeks ago. During his European tour in March, Kerry made it clear that the US does not intend to emulate the EU for the time being. And he had also asked to delay the CBAM project until after the COP26 conference in November in Glasgow. “[CBAM] would have serious implications for economies, for relationships, for trade. I think it’s more of a last resort, ”he said; “We leave open the possibility that Glasgow could be the moment when we can converge on an agreement on how we will proceed, avoiding an adjustment at the border”.
At least initially, the CBAM would only be imposed on certain sectors, including steel, aluminum, cement and fertilizers. These are mostly products traded globally. Therefore the tax risks hitting countries from which Europe imports in quantity, such as Russia, which according to internal estimates by the Commission is destined to become the main source of revenue due to the high carbon intensity of its products. Following in order are China, Turkey, the United Kingdom, Norway, Ukraine, Switzerland, South Korea, India and the United States.
“There is concern that American industry may get caught up in taxation,” said Samantha Gross, Brookings analyst, to Politico; the US “does not have a carbon price for the industry and is unlikely to have one in the future.” As a result, America, as well as other trading partners, could react by imposing sanctions on European products.
However, Brussels intends to move forward. Pero stated that CBAM will be prepared in such a way as to “surgically” target countries that have not adhered to the net zero emissions goal by 2050. He also promised that the measures would be compatible with the rules of the World Trade Organization, which they prohibit higher standards on imported products than on domestic ones. In theory, therefore, the mechanism will be designed to survive a dispute in the WTO.
The solution proposed by the Commission is to reform the ETS system to include the new measures on emissions, which would allow other countries to buy permits to be able to export certain products. Countries with emissions taxes in line with European ones would be exempt.
The obstacles to be overcome at the European level are related to the reticence of some countries particularly dependent on exports, such as Germany, which in fact is not among the signatories of the programmatic document. The real risk is that European products, more expensive to produce under the ETS regime reinforced by the rules on emissions, will become less competitive abroad.
Once these nodes have been overcome, there is the international arena. “We need to” find a balance between ambition – and the EU is rather ambitious – and the need for global cooperation “, said the European Commissioner for Economic Affairs Paolo Gentiloni during the G20 meeting in Venice; “They are both necessary and it is up to us to find a balance”.

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