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EU launches world’s first carbon border tax

Lazy eyes listen


As part of its effort to become a climate-neutral region, the EU introduced the first phase of an emissions tariff scheme on Sunday, with a planned import tax on steel, aluminium, cement, and fertilisers.

Brussels does not intend to collect CO2 emissions costs at the border during the first phase, which will last until 2026. Until then, the system will gather information on carbon-intensive imports.

Importers into the EU are now required to disclose greenhouse gas emissions associated with the manufacture of imported iron, steel, aluminium, cement, energy, fertilisers, and hydrogen.

They will be required to purchase certificates to cover these CO2 emissions beginning January 1, 2026. This will inevitably raise the final cost of the bloc’s imported goods, diminishing their competitiveness in comparison to domestically created items.

The Carbon Border Adjustment Mechanism is supposed to prevent more polluting foreign products from undermining the green transition. The measure will potentially protect local producers from losing out to foreign competitors, while they invest in meeting EU targets to cut the bloc’s net emissions by 55% compared to 1990 levels, by 2030.

According to European Economy Commissioner Paolo Gentiloni, the new strategy aims to spur a global move to greener production while also preventing EU firms from migrating to countries with less stringent environmental regulations.

The scheme has already been chastised by the EU’s biggest trading partners, who claim it hampers free trade. It has also heightened trade tensions between Brussels and Washington, with the latter requesting early this year that US steel and exports be tax-free.