Negotiators of the Council and the European Parliament reached an agreement of a provisional and conditional nature on the Carbon Border Adjustment Mechanism, which needs to be confirmed by ambassadors of the EU member states, and by the European Parliament, and adopted by both institutions before it is final.Concerning the products and sectors which fall within the scope of the new rules, CBAM will initially cover a number of specific products in some of the most carbon-intensive sectors: iron and steel, cement, fertilisers, aluminium, electricity and hydrogen, as well as some precursors and a limited number of downstream products. Indirect emissions would also be included in the regulation in a well-circumscribed manner.Under the provisional agreement, CBAM will begin to operate from October 2023 onwards. Initially, a simplified CBAM would apply essentially with reporting obligations only. The aim is to collect data. From then onwards, the full CBAM will kick in. It would be phased in gradually, in parallel to a phasing out of the free allowances, once it begins under the revised EU emissions trading system for the sectors concerned. This will ensure compatibility of CBAM with international rules on trade.The phasing out of free allowances for CBAM sectors still needs to be agreed in the context of the ongoing EU ETS negotiations. Further work is also required on measures to prevent carbon leakage on exports.The financing of administrative expenses of the European Commission, which will take on many centralised CBAM-related administrative tasks, will need to be decided in accordance with the annual EU budget procedure.
Negotiators of the Council and the European Parliament reached an agreement of a provisional and conditional nature on the Carbon Border Adjustment Mechanism, which needs to be confirmed by ambassadors of the EU member states, and by the European Parliament, and adopted by both institutions before it is final.Concerning the products and sectors which fall within the scope of the new rules, CBAM will initially cover a number of specific products in some of the most carbon-intensive sectors: iron and steel, cement, fertilisers, aluminium, electricity and hydrogen, as well as some precursors and a limited number of downstream products. Indirect emissions would also be included in the regulation in a well-circumscribed manner.Under the provisional agreement, CBAM will begin to operate from October 2023 onwards. Initially, a simplified CBAM would apply essentially with reporting obligations only. The aim is to collect data. From then onwards, the full CBAM will kick in. It would be phased in gradually, in parallel to a phasing out of the free allowances, once it begins under the revised EU emissions trading system for the sectors concerned. This will ensure compatibility of CBAM with international rules on trade.The phasing out of free allowances for CBAM sectors still needs to be agreed in the context of the ongoing EU ETS negotiations. Further work is also required on measures to prevent carbon leakage on exports.The financing of administrative expenses of the European Commission, which will take on many centralised CBAM-related administrative tasks, will need to be decided in accordance with the annual EU budget procedure.
