The European Union plans to impose carbon emission costs on imports of goods including steel, cement and electricity, Bloomberg News reported. The European Commission is due to propose its carbon border tariff policy on July 14.
This is a move which is designed to put EU firms on an equal footing with competitors in countries with weaker carbon policies than those of the bloc. Citing a draft of the proposal, Bloomberg reported that the border levy would be applied in full from 2026, after a phase-in from 2023. This applies to steel, cement, fertilisers, aluminium and power, as per the report.
Digital certificates, will be required to be bought by the importers, with each one representing a tonne of carbon dioxide emissions embedded in their imported goods. The cost of permits in the EU carbon market, will determine the price of the certificate. And also, this is based on the average price of auctions of EU carbon permits each week. The commission also declined to comment on this.
Every year, the importers must report the amount of emissions embedded in the goods they imported into Europe in the previous year, by May end. The number of border levy certificates that they surrendered must also be reported. EU power plants and industrial facilities are required to buy permits from the EU carbon market. This is to cover their emissions. This year the permit prices have soared to record. It is trading at 52 euros ($63.34) per tonne of CO2. Countries whose climate policy ambitions match those of the EU may be able to dodge the border fee, said the commission.