The European Commission (EC) is set to propose that steel, aluminium and other sectors be exempted from paying for duties related to the carbon emissions of exports, according to reports.
The FT reports today (2 July) that the EC is to deliver a proposal that would mean European firms in heavy metals and the cement industry would be able to claim compensation for exports funded by the bloc’s carbon border tax.
One official speaking to the publication said that EU measures addressing climate change could not come “at the expense of our own companies”, and that there was a duty to ensure they do not “face unfair competition on the global market”.
Brussels plans to cut its carbon emissions by 90% by 2040 from the levels seen in 1990, though 3% of this target could be met by international carbon credits, the FT suggests.
The new proposal would mean that companies would receive a refund in the form of free carbon permits for payments they have been made to cover the carbon emissions of their exports under the EU’s Emissions Trading System (ETS).
Simplification
In late May, the European Council put forward another set of proposals that it said would “reduce the regulatory and administrative burden” of CBAM for most importers to the EU.
Those changes meant a majority of EU firms were exempted from the legislation’s requirements, and were aimed at relieving regulatory burdens on SMEs in particular. Adam Szłapka, Poland’s EU minister, said:
“Simplification and reduction of the administrative burden for our companies to boost EU competitiveness remain among the priorities of the Polish presidency. Today’s agreement sends a clear signal that the Council is determined to advance on this path as fast as possible.”
The council then expressed its support for a ‘de minimis’ mass threshold of 50 tonnes of imported goods, previously proposed by the EC.
Fergus McReynolds, the Chartered Institute of Export & International Trade’s international and EU director, said:
“The decision to introduce the de minimis for CBAM declarations will be welcomed by traders both inside the EU and those trading in the market.
“It is an indication of the desire of the new EC, that took office at end of 2024, to address competitiveness concerns and reduce the burden on many thousands of businesses while having a limited impact on addressing carbon leakage from the EU.”
Divergence risks
In the Daily Update earlier this week, Chartered Institute expert Anna Doherty outlined the risks posed to the UK and EU economies by divergence on CBAM standards.
Speaking at the launch of the Chartered Institute’s new partnership with the Aluminium Federation (ALFED), Doherty said that businesses needed to be prepared for changes like CBAM in both jurisdictions.
“Managing compliance, optimising costs and avoiding penalties are critical to keeping businesses competitive,” Doherty said, noting that there would be a “significant cost and admin burden for businesses” if steps weren’t taken to prepare.
