CBAM: MEPs push for higher ambition in new carbon leakage instrument
- Phasing in CBAM earlier and ending free allowances in EU ETS by 2030
- Scope should be extended to include organic chemicals, plastics, hydrogen and ammonia as well as indirect emissions
- EU budget should support least developed countries through amounts equivalent to sums collected through CBAM
- Need for a centralised EU CBAM authority
MEPs call for a broader scope and faster implementation of the EU Carbon Border Adjustment Mechanism (CBAM) to raise global climate ambition.
On Tuesday, the Committee on Environment, Public Health and Food Safety adopted their report on the regulation establishing a Carbon Border Adjustment Mechanism with 49 votes for, 33 against and 5 abstentions.
MEPs agree on the need for a CBAM to reduce global carbon emissions by incentivising the reduction of emissions in non-EU countries and to prevent the risk of carbon leakage, i.e. the moving of production outside the EU in countries with laxer climate policies. However, MEPs propose a number of changes to increase climate ambition.
Broadening the scope of CBAM
MEPs want CBAM to cover aluminium, hydrogen, polymers and organic chemicals in addition to the products proposed by the Commission (iron and steel, refineries, cement, organic basic chemicals and fertilisers).
To better reflect CO2 costs for European industry, MEPs also want to extend CBAM to include indirect emissions, i.e. emissions deriving from the electricity used by manufacturers
Phasing in CBAM and ending free allowances in ETS
The CBAM would apply from 1 January 2023 with a transitional period until the end of 2024 and MEPs say it must be fully implemented for all sectors of the EU Emissions Trading System (ETS) by 2030 - 5 years earlier than proposed by the Commission.
Furthermore, and to avoid double protection, any free allowances granted to EU industries in the ETS, to address the risk of carbon leakage in the absence of a fair level playing field, should be fully phased out by 2030 when CBAM kicks in fully for the protected industries. MEPs stress that coherence between the CBAM and the EU ETS is essential to respect the principles of the World Trade Organisation and that CBAM must not be misused as a tool to enhance protectionism.
Need for a centralised EU CBAM authority
Rather than having 27 competent authorities, MEPs believe there should be one centralised EU CBAM authority, which would be more efficient, transparent and cost effective. This would also help to combat forum shopping from importers.
Revenues
MEPs want the revenues generated by the sale of CBAM certificates to go the EU budget. They add that the EU must provide financial support, at least equivalent in financial value to the revenues generated by the sale of CBAM certificates, to support least developed countries' efforts towards the decarbonisation of their manufacturing industries. This support would help meet the EU’s climate objectives and international commitments, such the Paris Agreement.
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After the vote, rapporteur Mohammed Chahim (S&D, NL), said: “Today’s vote is a great step in the right direction as it improves the Commission’s proposal to set-up an ambitious and future-proof CBAM that will be a crucial pillar of European climate policies. Adopting the CBAM will be win-win for Europe, as it will be an important mechanism to incentivise our trading partners to decarbonise their manufacturing industry and at the same time allow us to fully apply the polluter pays principle to our own industry.”
Next steps
The report is scheduled for a vote at the plenary session 6-9 June after which Parliament will be ready to start negotiations with member states.
Background
CBAM is part of the “Fit for 55 in 2030 package", which is the EU’s plan to reduce greenhouse gas emissions by at least 55 % by 2030 compared to 1990 levels in line with the European Climate Law.
Around 27 % of global CO2 emissions from fuel combustion currently comes from internationally traded goods and, while the EU has substantially reduced its domestic GHG emissions, those coming from imports to the EU have been constantly increasing, thereby undermining the EU’s efforts to reduce its global GHG footprint.
Contacts:
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Thomas HAAHR
Press Officer