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Provisional Agreement on EU CBAM Reached

Negotiators of the European Council and Parliament have announced a provisional agreement on the Carbon Border Adjustment Mechanism (CBAM), but warned it will only be formally adopted “once the elements relevant to CBAM are resolved in other related dossiers”. CBAM will initially cover specific product imports in some of the most carbon-intensive industries, issuing levies to iron and steel, cement, fertilisers, and aluminium. It will also cover hydrogen, indirect emissions under certain conditions and some downstream products. The levy will be launched October 2023 for a test period imposing reporting-only obligations on covered imported goods. After this transition period – the length of which will be debated in further negotiations this week – the full levy will apply. CBAM will be phased-in gradually, in tandem with the phasing-out of free allowances permitted under the EU Emissions Trading System (ETS). The exact phasing-out and phasing-in timeline still needs to be agreed in the context of going EU ETS negotiations. Jozef Síkela, Minister of Industry and Trade of Czechia, said: “I am very pleased that we reached this agreement today. The CBAM is a key part of our climate action. This mechanism promotes the import of goods by non-EU businesses into the EU which fulfil the high climate standards applicable in the 27 EU member states. This will ensure a balanced treatment of such imports and is designed to encourage our partners in the world to join the EU’s climate efforts.”

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