Another much-anticipated and likely controversial proposed regulation would establish a CBAM for certain imports. The Commission presented it as a measure to ensure that ambitious climate action in Europe does not lead to “carbon leakage” by pushing carbon-intensive production out of the single European market but contribute to a global emissions decline by encouraging the international partners of the EU and their industries to take steps in the same direction.

The products within the scope of the CBAM are enumerated in Annex I. Annex II would exclude the EFTA countries (but not the UK) from the scope of the CBAM. Regarding electricity, the final proposal states that once third countries are fully integrated into the European internal energy market (IEM) via market coupling, technical solutions should ensure the application of the CBAM to electricity exported from such countries into the customs territory of the EU. If technical solutions cannot be found, such third countries should benefit from an exemption from the CBAM until at the latest 2030. This exception would apply under certain conditions, including developing a road map, implementing a carbon pricing mechanism providing for an equivalent price as the EU ETS, and committing to achieving carbon neutrality by 2050, as well as to EU rules in the field of energy, environment and competition.

Read more:https://www.natlawreview.com/article/european-commission-proposes-carbon-border-adjustment-mechanism-cbam-iron-steel