EU Inches Closer to Approve World’s First Carbon Border Tax

EU Inches Closer to Approve World’s First Carbon Border Tax

The European Union on Tuesday moved closer to passing a tax on foreign companies that wish to import products that fail to meet climate-protection standards in which EU companies must comply. Once in place, the first-of-its-kind carbon border levy will shield EU’s industries from rivals in countries with lower CO2 pricing.

The new tax aims to create a competitive level playing field after EU companies claimed to be burdened with high costs to meet climate goals, while international competitors could easily import their goods without the same constraints and price better than local producers.

The EU parliament said in a statement that only “countries with the same climate ambition as the EU will be able to export to the EU” without being hit by the tax. “The new rules will therefore ensure that EU and global climate efforts are not undermined by production being relocated from the EU to countries with less ambitious policies,” the statement added.

The breakthrough tax between the EU parliament and the 27 member states yet falls short of a full deal, as some aspects of the tax, called Carbon Border Adjustment Mechanism, are stuck in other dossiers, delaying a full decision until a later date.