• UGI USER
  • Jul 23, 2024
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CONCERNS OVER EU CARBON BORDER ADJUSTMENT TAX

Why in the news?

  • The Economic Survey criticises the EU’s Carbon Border Adjustment Tax (CBAT) as protectionist.
  • The tax, part of the Carbon Border Adjustment Mechanism (CBAM), imposes tariffs on energy-intensive imports like iron, steel, and aluminium.
  • The Survey argues that CBAM contradicts the Paris Agreement’s principle of “Common but Differentiated Responsibilities.”
source:researchgate

About Carbon Border Adjustment Mechanism (CBAM) :

  • Purpose: Tariff on carbon-intensive products to ensure fair carbon pricing.
  • Implementation: Importers buy carbon certificates reflecting EU carbon prices.
  • Start Date: Definitive regime from 2026; transitional phase (reporting only) until 2025.
  • Coverage: Iron, steel, cement, fertilisers, aluminium, electricity, hydrogen.
About EU Carbon Border Tax (CBAM):

  • EU Carbon Border Tax (CBAM): Applies to imports of cement, steel, aluminium, fertilisers, electricity, and hydrogen.
  • Purpose: Aligns with EU’s goal to cut greenhouse gas emissions by 55% by 2030.
  • Mechanism: Requires carbon certificates, reflecting EU ETS carbon prices.
  • Objective: Encourages cleaner production abroad and prevents carbon leakage.

About European Union(EU):

  • Political and economic union of 27 European countries.
  • Established by Maastricht Treaty, effective from November 1, 1993.
  • Aims to promote economic and political stability through cooperation.
  • Uses Euro in 19 member states.
  • Single market allows free movement of goods, services, and capital.

Associated Article:

https://universalinstitutions.com/decong-the-eus-carbon-border-tax/