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.
Immediate support is needed to address skyrocketing power prices, as well as structural measures securing affordable low carbon energy to meet the EU Green Deal's objectives
Brussels, 15 September 2021 – In her second State of the Union address, European Commission President Ursula von der Leyen set out the Green Deal as a major achievement and a cornerstone for the future of the EU. The steel industry is a world leader in decarbonisation and innovation, and has the ambition of reducing its emissions by 55% by 2030 compared to 1990. But it will be successful only if the Fit for 55 Package puts the right conditions and incentives in place.
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.