The testing phase of the EU CO2 border adjustment system begins on Sunday. From then on, importing companies will have to report greenhouse gas emissions generated during the production of certain products, the European Commission announced today. Later, when the system finally comes into force, they will have to pay the carbon price that would have been incurred if production had been done in the EU.
“This ensures that the EU’s climate policy is not weakened by outsourcing production to countries with less demanding environmental standards or by replacing EU products with more CO2-intensive imports,” explained the Brussels official. Initially, the reporting obligation applies to imports of cement, iron, steel, aluminum, fertilizers, electricity and hydrogen.
The Carbon Border Adjustment Mechanism (CBAM) is scheduled to be fully implemented from 2026. According to the European Commission, the testing phase should serve as a “learning period” for everyone involved. The scope of the product and the possibility of extending it to other sectors covered by the emissions trading regime are also being examined.
The CBAM is part of the “Fit for 55” climate package, with which the EU aims to reduce its CO2 emissions by at least 55 percent by 2030. Many hope that the CO2 border tax will also provide a new source of revenue for the EU’s own resources.