Yesterday, the EU in principle agreed to a Carbon Border Adjustment Mechanism (CBAM) in the trilogue between the Council, the European Parliament and the European Commission. This is a key ingredient of the decisions taken as part of the Fit for 55 package. Under the CBAM, goods in a number of specific carbon-intensive industries such as steel and aluminium that are imported from third countries will be subjected to a carbon price. Yesterday’s trilogue agreement is just one element of this, with other points still needing to be spelled out. This means that some issues will need to be discussed and agreed as part of ETS reform. The final trilogue meetings on the ETS dossier will be held on 16 December. The Council’s formal consent to the political agreements will then be given at a later stage.

Minister Habeck said: “Yesterday’s agreement in the trilogue is an important step for both climate action and the competitiveness of the EU. The carbon border adjustment mechanism rewards ambitious climate action and this is exactly the way to go about it.”

The Carbon Border Adjustment Mechanism (CBAM) aims at ensuring that European companies will not be put at a competitive disadvantage as a result of ambitious climate action under the ETS. CBAM is part of the Fit for 55 climate package under which the EU is seeking to reduce carbon emissions by at least 55% by 2030. Going forward, importers of, for example, iron and steel will need to purchase carbon certificates corresponding to the embedded emissions in the goods they import.