By Mathew Carr
Monday May 16-17, 2022 — A vote to be held in the European Parliament’s environment committee planned for Tuesday on compromise rules of the region’s carbon border adjustment mechanism to be “tight,” said key lawmaker shepherding the measure Mohammed Chahim.
The EU’s planned Carbon Border Adjustment Mechanism (CBAM) is a climate measure that should prevent the risk of “carbon leakage” — industries shifting economic production to other countries — and support the EU’s increased ambition on climate mitigation, while ensuring World Trade Organization compatibility.
Climate change is a global problem that needs global solutions. As Europe raises its climate ambition and less stringent environmental and climate policies prevail in non-EU countries, there is a strong risk of companies based in the EU moving carbon-intensive production abroad to take advantage of lax standards.
The CBAM is meant to equalise the price of carbon between domestic products — which face carbon prices of about 90 euros a ton — and imports — which often face no carbon price.
Even after Tuesday’s (today’s) vote, there will probably be months of political wrangling on the CBAM measure, which has stirred accusations of unfair trade practices by some nations/exporters.
“I think we have a majority,” who will vote for the compromises Tuesday, Chahim said of the vote. “The majority is very, very tight.”
Here’s what’s on the table … read the thread:
On green hydrogen, Chahim said bringing that nascent industry into the CBAM system from about 2026 would ensure that product is protected from competition from non-green hydrogen produced outside the EU: Chahim
Organic chemicals and plastics will also be brought in, adding to these industries (listed and snipped here from an earlier document):
EU may phase out free carbon allowances in period from 2026-2034, assuming compromise rules stick; free allowances to be replaced by the carbon border adjustment mechanism: Chahim
Giving away free carbon allowances is the current way the region protects its industry from rivals based in dirtier countries.
Free allowances for CBAM industries will be phased out by 2030. Other industries to be brought into the CBAM system by 2034.
An “emergency brake” mechanism in the CBAM system could be applied for an industry or for the entire system.
Compromises are listed in the document published below (provided by Chahim, ahead of tomorrow’s vote).
Chahim said his skills in winning compromises were honed growing up with squabbling siblings.
Link to CarrZee story from earlier Monday.