A Carbon Border Adjustment (CBA) mechanism is a tool to support the EU's climate leadership by reflecting the carbon intensity of products imported into the EU, such as steel. This mechanism is important because EU producers have the highest environmental and climate protection goals in the world - and higher production costs that accompany this effort.
The European steel industry is therefore at very high risk of carbon leakage - the loss of sales to cheaply-priced, carbon-intense imports. Avoiding the risk of carbon leakage is a pre-condition for preserving both the environmental integrity of EU climate policy and industrial competitiveness since it contributes to reducing emissions at a global level while maintaining jobs and investments in Europe. This will also be instrumental in facilitating the social acceptance of EU leadership in climate ambition.
The European Green Deal underlines that the risk of carbon leakage can materialise in different forms, 'either because production is transferred from the EU to other countries with lower ambition for emission reduction, or because EU products are replaced by more carbon-intensive imports'. As long as there is no international binding agreement with a global carbon price and equivalent efforts, it is essential that the EU legislation adopts effective measures that avoid all forms of leakage in the short and medium terms.
The carbon border adjustment measure should be applied for a transition period until breakthrough technologies reach sufficient market penetration and CO2-lean products represent a critical mass in the market. It represents a broader contribution to a clean planet, as it is also an effective tool of political diplomacy to foster climate ambition in third countries so that deeper emission reductions are delivered globally.
Brussels, 15 July 2021 – The Fit for 55 package, released yesterday by the European Commission, needs a more finely balanced approach to enable the decarbonisation of EU steel industry whilst avoiding the leakage of production and CO2 emissions outside the EU.
Brussels, 12 July 2021 – The European Commission is expected to put forward its Fit for 55 package of climate and energy policy measures on 14 July 2021. The Fit for 55 package is one of the most significant - and largest - groups of measures the EU has ever released in one go. It will completely revise the basis of EU climate and energy policy in attempt to bring it into line with the EU's political ambition.
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