UE, CBAM Question and answers

The European Commission released on 10.05.2023 a memo with “Questions and Answers: Carbon Border Adjustment Mechanism (CBAM)”.

The first question is “…Why is the EU putting in place a Carbon Border Adjustment Mechanism?…”

The EU is at the forefront of international efforts to fight climate change. Indeed, the EU Commission added “…The European  Green Deal set out a clear path towards realising the EU’s ambitious target of a 55% reduction in carbon emissions compared to 1990 levels by 2030, and to become a climate-neutral continent by 2050. In July 2021, the Commission made its Fit for 55 policy
proposals to turn this ambition into reality, further establishing the EU as a global climate
leader. Since then, those policies have taken shape through negotiations with co-
legislators, the European Parliament and the Council, and many have now been signed
into EU law. This includes the EU’s plan for a Carbon Border Adjustment Mechanism
(CBAM).
As we raise our own climate ambition and less stringent environmental and climate
policies prevail in non-EU countries, there is a strong risk of so-called ‘carbon leakage’ –
i.e. companies based in the EU could move carbon-intensive production abroad to take
advantage of lax standards, or EU products could be replaced by more carbon-intensive
imports. Such carbon leakage can shift emissions outside of Europe and therefore
seriously undermine EU as well as global climate efforts. The CBAM will equalise the price
of carbon between domestic products and imports of a selected number of products and
ensure that the EU’s climate objectives are not undermined by production relocating to
countries with less ambitious policies. The CBAM is therefore a climate measure that
should prevent the risk of carbon leakage and support the EU’s increased ambition on
climate mitigation, while ensuring WTO compatibility. The European Parliament and the Council of the European Union, as co-legislators, signed the final CBAM Regulation on 10 May 2023. The provisions underpinning the CBAM, and its operational features will now progressively enter into force and application…”.