New EU carbon tariff: German industry slams bureaucratic burden

(EurActiv, 22 Aug 2023) Germany’s chemical and car industries are protesting the anticipated bureaucratic strain expected from the phase-in of the EU’s novel carbon border tariff (CBAM), while consultancy Deloitte finds that companies have failed to sufficiently prepare.

European manufacturers have previously been able to count on emitting about half of their CO2 without incurring extra charges under the EU’s carbon price (ETS) to maintain their competitiveness vis-à-vis foreign products. 

However, in 2021, the European Commission proposed to replace the free emissions rights with a protective carbon tariff – the Carbon Border Adjustment Mechanism (CBAM). The scheme was ultimately adopted, to be gradually phased in from 2026. 

Slowly, companies hoping to export their carbon-heavy products into Europe will have to pay up – incrementally matching the carbon avoidance costs of EU companies until 2032, when the scheme will take full effect.

Initially, only steel, iron, cement, aluminium, electricity, hydrogen, and fertiliser – goods whose production is associated with a big share of global CO2 emissions – will be affected by the tariff.

In mid-August, the Commission published the detailed reporting requirements that companies will have to comply with. The data gathering will have to start on 1 October this year and the first report is due for 31 January 2024, much to the dismay of Germany’s chemical industry.

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EurActiv, 22 Aug 2023: New EU carbon tariff: German industry slams bureaucratic burden