In a move to prevent ‘carbon offshoring’ the EC has reached an agreement on its Carbon Border Adjustment Mechanism (CBAM) regulation, a part of the Fit for 55 package.

CBAM targets imports of carbon-intensive products to prevent offsetting the EU’s greenhouse gas emissions reduction efforts through imports of products manufactured in non-EU countries and “encourage” partner countries to establish carbon pricing policies.

Cement, aluminium, fertilisers, electric energy production, iron and steel will initially be covered by CBAM.

CBAM is designed to function in parallel with the EU’s Emissions Trading System (EU ETS), to mirror and complement its functioning on imported goods. It will gradually replace the existing European Union mechanisms to address the risk of carbon leakage, in particular the free allowances of EU ETS allowances.

The Council still has to make sufficient progress on a number of issues which are closely related to CBAM. Once sufficient progress will have been achieved at the Council, the Council will start negotiations with the European Parliament, after the latter has agreed its position.

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