Steam flows from a steel factory chimney in the industrial city of Port Kembla, about 80 kilometers (50 miles) south of Sydney on July 7, 2011. REUTERS/Tim Wimborne/File photo Obtaining licensing rights
BRUSSELS (Reuters) – The European Union on Sunday launched the first phase of the world’s first system to impose tariffs on carbon dioxide emissions on steel, cement and imported goods as it tries to prevent more polluting foreign products from undermining its green transition.
The planned tariff has raised concern among trading partners, and at a forum last month, China’s top climate envoy Xie Zhenhua urged countries not to resort to unilateral measures such as an EU tax.
The Union will not start collecting any fees for carbon dioxide emissions at the border until 2026.
However, Sunday marks the start of the initial phase of the Carbon Border Adjustment Mechanism (CBAM) when EU importers must report embodied greenhouse gas emissions during the production of imported quantities of iron, steel, aluminium, cement, electricity and fertilisers. And hydrogen.
Importers from 2026 will need to buy certificates to cover carbon dioxide emissions to put foreign producers on an equal footing with EU industries that must buy permits from the EU carbon market when they pollute.
European Economic Commissioner Paolo Gentiloni said the aim was to encourage the global shift to greener production and prevent European manufacturers from moving to countries with lower environmental standards.
It also aims to prevent them from losing out to foreign competitors while they invest to contribute to EU targets to cut the bloc’s net emissions by 55% by 2030 from 1990 levels.
Companies in the European Union, Britain and Ukraine told Reuters they expect a limited initial impact during the trial phase.
The European Commission says the border tax is in line with World Trade Organization rules in that it treats foreign and domestic companies equally and allows a deduction from the border fee for any carbon prices already paid abroad.
“CBAM is not about trade protectionism. It is about protecting the EU’s climate ambition – and striving to raise the level of climate ambition around the world,” Gentiloni said in written responses to Reuters’ questions.
European steel industry association Eurofer, which has been at the forefront of those in Europe seeking border tariffs, said the initial phase would test how tightly CBAM can avoid shifting industrial production offshore to countries with less ambitious climate policies.
Among Europe’s important trading partners, the Chinese Foreign Ministry, the Turkish Trade Ministry and a US official declined to comment on the launch.
(Reporting by Philip Blenkinsop and Kate Abnett – Preparing by Muhammad for the Arabic Bulletin) (Additional reporting by Valerie Volcovici in Washington, Nevzat Devranoglu in Ankara and David Stanway in Beijing) Editing by Barbara Lewis
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