The EU passed legislation for an import “green tariff” on items with significant carbon dioxide emissions making it the first major economy to do so.
With the carbon border adjustment mechanism (CBAM), nations that don’t green their industries will soon be threatened by a real carbon tax that will punish those looking to make money from high-carbon activities and drive them to reduce their carbon footprint. Countries that do not decarbonize industries like iron and steel will be subject to an actual carbon tax. Iron and steel, cement, fertilizers, aluminum, electricity, hydrogen, and some chemicals will be the first industries to use the system.
The negotiations were overseen by the Czech Republic’s Minister of Industry and Trade, Jozef Skela. The agreement is still provisional, and member states and other institutions must determine its specifics. But if everything goes as planned, CBAMs will begin to be used starting in October next year.
Companies will just be required to report on the emissions connected with the manufacture of the items they seek to sell initially under the EU’s CBAM; there won’t be any financial or other penalties.
The deal is a first of its kind globally and is an outcome of the decision made as part of the EU’s green deal, a significant effort to meet the EU’s strict climate targets.