EU Finalizes Carbon Tax That Would Impose News Costs On Importers

The European Union has approved legislation to impose taxes on imports based on the greenhouse gasses emitted during manufacturing. Goods covered under the mechanism include iron, steel, aluminum, cement, electricity and hydrogen, and downstream products like screws and bolts.

Companies that import these products into the EU would need to purchase certificates to make up the difference between the carbon price paid in the products’ country of origin and the price of carbon allowances in the EU.

The action taken last week by the EU was the final hurdle for the plan to become law.

Trade partners have raised concerns about the administrative overhead that could be involved in exporting to Europe under the new regulations. Indeed, as Connecting the Dots  reported earlier this month, U.S. government asked the European Union (EU) to exempt U.S. operations from its carbon border levy.

According to Aluminum Insider, the EU will assess a carbon price on some imported goods to offset the expense to EU companies for producing their goods with fewer carbon emissions. As a result, imported aluminum, steel, cement, and fertilizers, and steel will begin reporting their carbon footprint to the EU this fall, and imports will be assessed a tariff based on that number.

The U.S. request is unlikely to be approved, Aluminum Insider said, since the EU’s regulations make such an agreement all but impossible and an agreement of that nature also runs counter to World Trade Organization rules.

The carbon tax is part of the EU’s “Fit for 55 in 2030” plan, which aims to reduce the EU’s greenhouse gas emissions by at least 55 percent of their 1990s levels by 2030.