EU Tightens Rules on Suspending Carbon Fee for Imports, Impacting Industry
EU Carbon Border Levy and Policy Changes
By Kate Abnett
Background and Recent Agreement
BRUSSELS, June 12 (Reuters) - European Union countries agreed on Friday to restrict the circumstances in which the bloc can suspend its carbon emissions fee on imports, potentially helping to provide more certainty for low-carbon investments in the bloc.
EU economy ministers backed the plans with majority support, despite countries including Slovakia, Romania and Lithuania declining to support them.
Purpose and Scope of the Carbon Border Levy
The EU carbon border levy imposes a fee on the emissions associated with imports of goods, including fertilisers, steel and cement. The world-first policy aims to protect European industries from being undercut by cheaper, more polluting goods from abroad.
Original Proposal and Industry Concerns
The European Commission originally proposed that it could remove goods from the carbon levy in future if unspecified "serious and unforeseen circumstances" resulted in higher prices.
Some governments and companies rejected that approach, saying it created uncertainty for low-carbon investments that are only competitive if polluting imports are subject to the EU emissions fee.
Revised Criteria for Suspending the Fee
A draft of the ministers' agreement, seen by Reuters, said the Commission could propose suspending the carbon fee only if criteria are met, including that the price of the product concerned had increased by more than 50% over six months, versus the average over the last 10 years.
Next Steps and Additional Provisions
EU countries and lawmakers will negotiate the final rules. EU lawmakers also plan to scale back or delete the suspension clause entirely.
Special Considerations for Member States
France led calls after the Iran war drove up costs for the EU carbon fee to be suspended for fertilisers to help farmers.
It supported the deal on Friday, after it received concessions that would benefit French overseas departments Guadeloupe and Martinique by allowing these territories' cement imports to avoid the charge during natural disasters or other emergencies.
Expansion of Covered Goods
The proposals, once finalised, will also extend the list of goods covered by the carbon fee to include products such as washing machines and car parts.
(Reporting by Kate Abnett; editing by Barbara Lewis)