According to the Annex to the European Commission Work Program 2021 the legislative proposition for Carbon Border Adjustment Mechanism (CBAM) is envisioned for Q2 2021.
European Commission Communication of December 2019 (COM(2019)640) envisions the Carbon Border Adjustment Mechanism for selected sectors among the key policies and measures needed to achieve the European Green Deal.
In turn, European Commission Communication of 19 October 2020 on the Commission Work Programme 2021, “A Union of vitality in a world of fragility” contains the following passage:
“As mentioned in President von der Leyen’s Political Guidelines, the Commission will propose a carbon border adjustment mechanism to help motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring a level-playing field conducive to trade in a WTO-compatible way.”
The European Commission document of 4 March 2020 “Carbon border adjustment mechanism, inception impact assessment” as regards the type of policy instrument at issue mentions “[v]arious options could include a carbon tax on selected products – both on imported and domestic products, a new carbon customs duty or tax on imports, or the extension of the EU ETS to imports”.
It is also reserved that the details will have to be "carefully assessed" with respect to:
- the legal and technical feasibility of each measure, also in relation to the EU’s trade acquis (the rules of the World Trade Organisation and EU’s trade agreements) and other international commitments;
- the complementarity of the measure with internal carbon pricing, in particular the EU ETS, as well as how it relates to the current measures to avoid the risk of carbon leakage.
The European Commission notes that the measure “should be commensurate with the internal EU carbon price”.
Amendments by the Committee on the Environment, Public Health and Food Safety Report Jytte Guteland A9-0162/2020 European Climate Law Proposal for a regulation (COM(2020)0080 – COM(2020)0563 – C9-0077/2020 – 2020/0036(COD)) A9-0162/ 001-100
Recital 23 c (new)
A Union climate policy that is fully efficient should address carbon leakage and develop the appropriate tools, such as a carbon border adjustment mechanism, to cope with it and protect Union standards and the frontrunners of Union industries.
In the Communication of 9 April 2019 (A more efficient and democratic decision making in EU energy and climate policy, COM(2019) 177 final), the European Commission reminds that current energy taxation framework is based on Article 113 TFEU (which provides for a special legislative procedure with unanimity in the Council), hence "the recent call by some Member States to make use of border carbon tax adjustments would also require unanimity".
To apply a carbon border adjustment, traders and authorities may need to determine the greenhouse gas emissions associated with the production of an imported product.
However, “in order to limit the administrative burden, the options considered should build on existing and agreed methodologies”.
Nevertheless, ancillary verifications, controls and audits of installations in third countries may be needed.
An impact assessment will be carried out to support the preparation of this initiative and to inform the European Commission's decision.
The impact assessment will be based on a dedicated study and will rely on the findings of the parallel impact assessment on:
- the revision of the EU ETS;
- the revision of the Energy Taxation Directive (ETD); and
- the EU’s increased level of ambition regarding climate change for 2030.
In view of the economic analysis, both economic models and appropriate quantitative tools will be used in order to study the macroeconomic impact as well as the impact on households of the proposed options.
4 March 2020
European Parliament, Carbon emissions pricing: Some points of reference, 30 March 2020