The European Union is less than three months away from launching its carbon levy — the world’s first large-scale border tax on carbon-intensive goods.
The forthcoming step, which has the potential to completely transform global trade, comes as part of the bloc’s efforts to slash greenhouse gas emissions from heavy industries and promote cleaner production processes across the globe.
Starting from Jan. 1 next year, the EU’s Carbon Border Adjustment Mechanism (CBAM) will impose a cost on goods such as steel, fertilizers, cement, aluminum and hydrogen imported from outside the 27-nation bloc.
Under the terms of the policy, importers bringing these goods into the EU will be required to purchase CBAM certificates to cover their associated emissions. The cost of these certificates is expected to be the same as the EU Emissions Trading System (ETS) market price.
Not everyone is thrilled about the EU’s upcoming carbon border tax. The U.S., China, India and Brazil are among the countries that have raised concerns, with some threatening to take retaliatory measures and others warning the policy might hinder rather than help global climate efforts.
