The Environment Committee of the European Parliament took its position on the Carbon Border Adjustment Mechanism (CBAM), a financial instrument meant to put a price on carbon-intensive imports from outside the European Union. The EU’s co-legislator insisted that such a mechanism should replace existing free allocations in the EU Emissions Trading System (ETS). 

Doreen Fedrigo, Industrial Transformation Policy Coordinator at Climate Action Network (CAN) Europe reacted: “The carbon border adjustment mechanism aims to ensure a level playing field for EU industries in their move to net-zero greenhouse gas emissions, and to incentivise economies worldwide to do the same.

In today’s vote, the European Parliament importantly highlights that industry cannot have its cake and eat it. Parliamentarians made it clear that if the CBAM is introduced, free allocations of pollution permits under the EU ETS will need to stop completely. This is a clear call for closing a loophole that shields the vast majority of carbon-intensive industries from paying for the climate damage it causes.”

Industrial emissions levels are currently stagnating. This trend, although deeply incompatible with the Bloc’s climate neutrality target, is expected to continue unless necessary action is taken to both decrease domestic emissions and prevent industry from relocating outside the EU where it is shielded from paying for its emissions (also called carbon leakage).

Under the EU’s current carbon market, the EU ETS, the vast majority of carbon-intensive industries in the EU receive their pollution permits for free. Rather than applying the polluter pays principle enshrined in EU Treaties, industry has been able to make billions in windfall profits, although evidence about carbon leakage is lacking. Recently, the EU Court of Auditors has found major failures in the EU ETS and called for improvements to address carbon leakage [1].”

 The Emissions Trading System will be revised this year to align with the new 2030 climate target adopted last December. Its reform will need to phase out free allowances to industry and lead to a much higher carbon price to push highly polluting industrial sectors to reduce greenhouse gas emissions deeper and faster.

 Doreen Fedrigo added: “Any mechanism to decrease emissions must be designed in a way that it treats developing countries fairly. The EU needs to substantially increase its climate finance support to those countries so that they can reduce the carbon footprint of their industries as well.”

 ENDS

Notes to the Editor :

[1]https://www.eca.europa.eu/Lists/ECADocuments/SR20_18/SR_EU-ETS_EN.pdf

Contact:
Goksen Sahin, Communications Coordinator, goksen@caneurope.org, +32 468 45 39 20