Europe adopts EUA border tax rule

The European Commission has adopted a new carbon border adjustment mechanism (CBAM) for certain imported goods, it said on Thursday.?

This will govern the CBAM transitional phase from 1 October until the end of 2025.?

It included details of reporting obligations for EU importers and methodology for calculating embedded emissions released during production.?

During the transitional phase, firms will only have to report on their emissions without paying any financial adjustment.?

“This will give adequate time for businesses to prepare in a predictable manner, while also allowing for the definitive methodology to be fine-tuned by 2026,” the EC said in a statement.?

Q4 data

Importers will be asked to collect Q4 data from 1 October and submit their first report on 31 January 2024.?

Under the new CBAM rules, companies importing products in the aluminium, cement, electricity, fertiliser, hydrogen, iron and steel sectors will be the first buyers of allowances covering these products’ carbon content.?

EU producers in these sectors will see their free Emissions Trading System carbon allowances (EUAs) gradually phased out by 2034, as the new CBAM rules are gradually phased in. This is to respect WTO rules.?

The electricity sector is not affected by this as it does not receive any free EUAs.?

The aim is to switch from using free EUAs to the CBAM as the method for reducing the risk of EU producers in these sectors relocating to regions with less strict carbon constraints, known as carbon leakage.?

The European Parliament and EU Council of ministers gave their final approvals on the CBAM rules in April.?

Source:?montelnews.com