By Martin Shwenk Leade
Copyright indiatimes
iStockWith these steps, the EU is responding to key concerns from industry and trading partners who argue the CO2 levy is too easy to dodge and unfairly penalises domestic exporters.
The European Union plans to introduce measures by the end of the year to close loopholes in one of its flagship climate policies, which was designed to stop industries from relocating abroad as the bloc shifts to a greener economy.The European Commission, the EU’s executive arm, is preparing a three-pronged package to refine its Carbon Border Adjustment Mechanism, according to a person familiar with the matter. The plan would extend CBAM to some assembled goods such as washing machines, address attempts by producers to circumvent the rules and introduce support for the bloc’s export industries.With these steps, the EU is responding to key concerns from industry and trading partners who argue the CO2 levy is too easy to dodge and unfairly penalises domestic exporters. This week, member states approved changes that exempt the vast majority of small companies, simplifying the rules.The move comes amid fears that Europe is deindustrialising under the strain of high energy prices and the green transition, which critics say adds to business costs. Germany has urged extending the system of free carbon permits to emit C02 — which is set to be phased out over the next decade and replaced with CBAM — to provide relief for industry.Instead, the commission plans to use CBAM revenues to fund export credits for sectors most dependent on shipping products abroad, according to the person, who asked not to be identified because the information isn’t public. It will be structured to comply with World Trade Organisation rules. While levies are set to be collected starting next year, they will initially cover only a small share of goods.Live EventsFrance has made stricter CBAM rules a condition for supporting an ambitious EU emissions-reduction target for 2040, which leaders will debate next month.CBAM currently applies to the most emissions-intensive goods such as steel and aluminum, but the EU now plans to extend it to certain downstream sectors to stop countries from exporting manufactured products made with those materials. The system will be based on criteria related to trade intensity, while ensuring it remains manageable for imports with many component parts, the person said.The scope won’t be extended to sectors such as chemicals this year, as that requires deeper analysis, the person said.Another concern is that countries could send cleaner products to the EU while exporting dirtier ones elsewhere. The EU is considering a system that sets CO2 values at the country level, while still rewarding the most innovative manufacturers, the person said.The commission’s proposals must be approved by member states and the European Parliament, meaning the changes may not take effect until 2027.Add as a Reliable and Trusted News Source Add Now!
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