EU member states have reached agreement on the world’s first major carbon border tax.

The Carbon Border Adjustment Mechanism (CBAM) seeks to impose a levy on foreign importers that do not meet EU standards on carbon emissions and prevent the effective ‘offshoring’ of carbon.

The deal is now expected to be formally agreed by leaders at the EC and come into force in 2026. The deal is not without its critics, with the US and South Africa, in particular, saying that is unfair and penalise their manufacturers, leaving them open to cheap imports from companies that will not pay the charge but export their goods to them instead.

Further raising the temperature of the disagreement, the EU has also proposed that its manufactures could get EU financial aid to compensate for the additional costs and keep EU exports competitive. If this did happen, it would inevitably end in a WTO ruling, as many believe it would contravene trading rules.

It was also agreed the target for reducing emissions in industries covered by the European Emissions Trading System could be raised to 62 per cent by 2030

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