EU Countries Agree on World-First Carbon-Border Tariff on Polluting Goods

The new carbon-border tariff will affect imports of polluting goods including steel, iron, cement, fertilisers, aluminium, and electricity.

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After a night of intense negotiations, the European Union reached a deal in the early hours of Tuesday morning to impose a carbon-border tariff on imported goods. 

The move comes in an attempt to support European industries in their decarbonisation efforts and is part of the European Green Deal, a plan that sets out a clear path towards the EU’s ambitious targets of a 55% reduction in carbon emissions compared to 1990 levels by 2030 and carbon neutrality by mid-century. 

The new carbon-border tariff targets imported goods including steel, aluminium, cement, fertilisers, and electricity, and requires overseas and domestic companies to buy permits to cover the CO2 emissions associated with them. 

Under the Carbon Border Adjustment Mechanism approved in July 2021, EU-based companies are already required to buy certificates from the EU carbon market scheme to cover the price “that would have been paid, had the goods been produced under the EU’s carbon pricing rule.”

French economy minister Bruno Le Maire described the deal as a “victory for European climate policy.”

The 27-nation bloc is undoubtedly at the forefront of international efforts to fight climate change. Earlier this month, EU lawmakers and negotiators agreed on other measures to facilitate the clean transition, including adding the shipping industry to the EU Emission Trading System (ETS), a new plan to certify carbon removal projects, and a new set of rules targeting packaging waste.

In June, member states agreed on another set of tougher climate measures, including a ban on the sale of combustion engine-powered cars by 2035 and a €59 billion (US$62.3) fund to compensate those affected by the new energy transition policies.

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