Press release on the vote on the Carbon Border Adjustment Mechanism (CBAM)

"EU Environment Committee puts a global climate protection instrument on the table in the fight against climate change"

Brussels, 17/05/2022 – Today, the Committee on the Environment, Public Health and Food Safety (ENVI) voted on key parts of the EU’s climate package “Fit for 55“. Special attention was paid to the proposal for a Carbon Border Adjustment Mechanism (CBAM). This climate protection measure aims to prevent the risk of carbon leakage, support the EU’s ambitious climate protection goals and is WTO compatible.

As a shadow rapporteur for CBAM, Manuela Ripa, Member of the European Parliament for the Ökologisch-Demokratische-Partei (ÖDP), has been in charge for the Greens/EFA of negotiating a compromise proposal with the other groups in the European Parliament.

Manuela Ripa comments: “With today’s vote, we are presenting a global solution to climate change. In order to set global standards, the EU must use instruments that reward low CO2 levels and make high carbon values ​​more expensive.”

Ripa welcomes the fact that the ENVI Committee was able to add important additions to the original Commission proposal. “We have achieved that the taxation mechanism will come into force a year earlier, namely from 2025. From then on, CBAM will be phased in, while the free allowances of the EU Emissions Trading Scheme (EU ETS) will be phased out in the sectors covered by CBAM.”

The ENVI Committee supports a 10% reduction in free allowances from 2025 to 2027. In 2028, a reduction to 50% will take place and in 2029, the reduction will total a 25%. Manuela Ripa affirms: “From 2030 onwards, free allowances will no longer be allocated.” By January 2030, the scope of CBAM will be the same as the sectors covered by the EU ETS.

The report now also creates the basis for the establishment of a CBAM authority that will strictly monitor and punish attempts at fraud and circumvention. “This is definitely a more efficient alternative to having 27 individual monitoring national authorities,” Manuela Ripa is convinced. This would also avoid the risk of forum shopping and at the same time increase efficiency.

“We were also able to achieve that the scope of CBAM is extended to other sectors, such as polymers, hydrogen and ammonia”, adds the EU-politician.

In addition, indirect emissions resulting from the generation of electricity used in the manufacture of goods will also be included in the scope from the beginning. “In order to accomplish our climate goals, it is crucial that CBAM is as far-reaching as possible and covers as many areas as possible”, explains Manuela Ripa.

“To tackle the climate crisis, we must not leave the least developed countries behind in the process of global decarbonization. I am therefore very pleased that we have managed to negotiate into the proposal that these countries will receive financial support to convert their industry. This is a great win in the fight for social justice, in the support of global climate protection and adaptation to climate change,” explains the MEP.

The annual amount should at least correspond to the amount of revenue from the sale of CBAM certificates, so that they can use the revenue to finance local climate protection measures for least developed countries.

“Last but not least, we have also agreed that the Commission will closely monitor the development of possible carbon leakage effects in exports from the EU and, if necessary, propose measures that are compatible with world trade law.

Overall, we have found an excellent basis for implementing the European Green Deal. We have adopted an instrument that reduces greenhouse gas emissions globally, prevents carbon leakage, keeps our industry competitive and ensures WTO-compatibility. Now it comes down to the vote in plenary at the beginning of June. I very much hope that the compromises that have been found will not be weakened.”

Context: “Fit for 55” contains a series of legislative proposals that aim to reduce net greenhouse gas emissions by at least 55% by 2030. The carbon border adjustment mechanism is part of the Fit for 55 package as well as a key measure of the European Green Deal. CBAM aims to reduce the risk of carbon leakage by providing an incentive for manufacturers in non-EU countries to make their manufacturing processes more environmentally friendly. To complement the ETS, the CBAM will be based on a system of certificates to cover the embedded emissions in products being subsequently imported into the EU, i.e. EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU’s carbon pricing rules. A higher CO2 content leads to higher taxation, a lower one to an exemption from taxes.