Brussels rules out double carbon compensation for EU steelmakers

(EurActiv, 26 Mar 2021) The European Commission has made it clear that industries covered by the EU’s upcoming carbon border levy will no longer receive free CO2 allowances under the bloc’s carbon market, the emissions trading scheme (EU ETS).

“Several options are being considered” for the EU’s carbon border adjustment mechanism (CBAM), which will impose a carbon price on imported goods coming into the European Union, said Mette Koefoed Quinn, a senior official at the Commission’s climate directorate.

But none of them include free CO2 allowances for industries covered by the new carbon border charge, which may include steelmaking alongside other industries like power generation, cement, aluminium or fertilisers.

“This has been clearly stated by the Commission: we do not see that the two instruments are compatible at the same time. It would be a double funding and it would not be WTO-compatible,” said Koefoed Quinn, who spoke at a EURACTIV event on Tuesday (23 March).

The EU’s upcoming carbon border levy seeks to address the risk of “carbon leakage” whereby companies relocate manufacturing or investments outside of Europe where pollution costs are lower. And that risk is currently “well addressed” by free allocations under the ETS, Koefoed Quinn said, ruling out additional compensation for steelmakers.

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EurActiv, 26 Mar 2021: Brussels rules out double carbon compensation for EU steelmakers