EU Adopts Carbon Tax at the Border to Make Imports Greener

The European Parliament and the EU Member States announced this Tuesday morning that they have adopted an unprecedented mechanism to make European imports greener by charging for the carbon emissions associated with their production. Commonly known as the „carbon tax at the border,“ this system will subject imports in several sectors (steel, aluminum, cement, fertilizers, electricity, but also hydrogen) to EU environmental standards. The goal is to turn European companies towards more environmentally friendly internal imports within the Union. A test period will begin in October 2023 and implementation of the system depends on successful talks this week on ending free emission quotas which are currently available to European industrialists. The European Parliament wants to phase out these free quotas by 2027. In summary, a new carbon adjustment mechanism has been adopted by the EU which aims to make imports greener and reduce reliance on external sources of goods by charging for carbon emissions associated with production and phasing out free emission quotas.

How a Carbon Tax Works

A carbon tax is a fee imposed on the burning of fossil fuels, such as coal and oil. The purpose of this tax is to reduce emissions of carbon dioxide (CO2) and other greenhouse gases into the atmosphere. The revenue generated by a carbon tax can be used to support renewable energy initiatives, provide financial incentives for businesses to become more energy efficient, or fund other climate-friendly projects. Carbon taxes are designed to create an economic incentive for individuals and companies to reduce their emissions and make environmentally friendly choices.
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Picture source: Appolinary Kalashnikova