Towards a WTO-compatible EU Carbon Border Adjustment Mechanism

17-11-2020 - 09:12
Carbon Border Adjustment Mechanism Carbon Border Adjustment Mechanism
Carbon Border Adjustment Mechanism © Adobe Stock

The introduction of a WTO-compatible carbon border adjustment mechanism (CBAM) is touted as a key element of the European Green Deal. It will serve to ensure that, as the EU continues to increase its climate ambition, its partners also play ball.

The CBAM would place a carbon price on imports of certain goods from outside the EU, in order to push third countries to raise their climate ambition and reduce the risk of 'carbon leakage'. This term describes a phenomenon where companies transfer production outside the EU to countries that have less stringent emission rules in place. Carbon leakage would defy Europe's efforts to become climate-neutral by 2050, by relocating - rather than reducing - emissions. ENVI held the consideration on this draft report on Wednesday 28 October 2020.