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Europe’s carbon border levy could pose another post-Brexit challenge for Ireland
(EurActiv, 31 Jan 2022) The European Union is planning to introduce a levy for carbon-intensive goods later this decade, but it risks creating more post-Brexit problems on the island of Ireland, landing importers of UK goods with potentially expensive new procedures.
The carbon border adjustment mechanism (CBAM) was proposed by the European Commission in July 2021 and has been promoted by the EU as a way to protect businesses as they decarbonise, and prevent carbon leakage, where companies move out of Europe to places where it is cheaper to pollute.
The CBAM proposal, which is currently being negotiated by the European Parliament and EU governments, would see a trial period start in 2023 and the levy enter into force in 2026.
Once fully implemented, it would apply a levy on certain carbon-intensive products – at the moment, electricity, iron and steel, cement, aluminium and some fertilisers – if they are produced outside of Europe’s emissions trading scheme (EU ETS) with a carbon price lower than the EU’s.
The UK is one of the countries most exposed to the levy, with exports of iron, steel and aluminium particularly vulnerable, according to trade expert Sam Lowe.
And, even if the UK’s carbon price is high enough to avoid the levy being applied, there will still be potentially expensive hoops to jump through to import products from Northern Ireland and the UK into Europe.
EurActiv, 31 Jan 2022: Europe’s carbon border levy could pose another post-Brexit challenge for Ireland
