The German newspaper Frankfurter Allgemeine Zeitung has been publishing leaks from the European Commission of its Fit for 55 programme, a reference to the 55 per cent CO2 reduction target for 2030. A critical part of that programme is the so-called carbon border adjustment mechanism (CBAM). The idea is to a keep a level playing field with non-EU companies, who may not be subject to the same carbon taxes and fees as EU producers.
The scheme is limited initially to the following sectors: electricity, iron and steel, cement, aluminium and fertilisers. Companies in some sectors will get free allowances, to be phased out over time, to protect them from possibly unfair competition. The tax is a levy on importers. Those not exempt will have to pay for CBAM certificates. The price will be coupled to that of ETS permits. The scheme is due to become operational from 2023, and the receipts are to be used for the repayment of the recovery fund loans.
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