Recap on CBAM evolution
Last summer, the European Commission (the Commission) presented a set of proposals (“Fit for 55” legislative package). This package aims to align the European Union (EU) climate, energy, land use, transport and taxation policies with the goal of reducing net greenhouse gas (GHG) emissions by at least 55% from 1990 levels by 2030 with the overarching goal to achieve climate neutrality in Europe by 2050.
One of the proposals is the Carbon Border Adjustment Mechanism (CBAM), which will introduce a carbon price on certain products imported into the EU. The CBAM proposal will be enacted by the European Parliament (EP) and the Council of the EU. The ordinary legislative procedure sets out that the responsibility committee for CBAM is the EP’s Committee on the Environment, Public Health and Food Safety (ENVI). In December 2021, the ENVI completed the first reading of the proposal and submitted their recommendations to the EP. The recommendations are seen as a substantial transformation of the initial draft, aimed at rapid deployment with wider coverage. More details on the recommendations are provided below.
The CBAM is a key element of the Commission’s “Fit for 55” legislative package, which aims to reduce net greenhouse gas emissions by at least 55% by 2030, from 1990 levels, as set out in the European Green Deal (EGD).
Key elements of the CBAM include:
- Imposition of a carbon price on imports of a targeted selection of products to ensure that ambitious climate action in Europe does not lead to “carbon leakage”
- More rapid phase out of free emission allowances for goods covered by CBAM, aviation and include shipping emissions in the EU ETS (Emission Trading System)
- Alternative Fuels Infrastructure Regulation requires that aircraft and ships have access to clean electricity supply in major ports and airports
- Maximum limit on the greenhouse gas content of energy used by ships calling at EU ports
- A revision of the Energy Taxation Directive proposes to align the taxation of energy products with EU energy and climate policies
The ENVI is the responsible committee for CBAM and has submitted recommendations to the EP. Other concerned committees including the Committee on International Trade (INTA), Committee on Economic and Monetary Affairs (ECON), and Committee on Agriculture and Rural Development (AGRI) have also provided their recommendations to ENVI to be considered for the amendment of CBAM proposal.
Summary of CBAM recommendations from ENVI and other committees