The Council of the European Union approves the CBAM, the new Carbon Border Adjustment Mechanism

Few days ago, the Council of the EU reached an agreement on the CBAM Regulation (Carbon Border Adjustment Mechanism), one of the key elements of the Fit for 55 Package.

It is the innovative tool proposed by the European Commission designed to operate in parallel with the EU ETS System, and gradually replace the free allocation of ETS allowances to address the risk of carbon leakage.

The CBAM regulation, in fact, will lead EU importers to purchase “carbon certificates” for products made in third countries where no price is paid for the CO₂ emitted for the production of the good itself.

The transitional phase of the CBAM application will begin in 2023 and end at the end of 2025. It will initially cover only products of the following sectors: cement, aluminium, fertilisers, electric energy production, iron and steel.

The main changes introduced by the Council include the centralisation at EU level of the new register of CBAM importers and the establishment of a minimum threshold which exempts consignments with a value of less than €150 from CBAM obligations.

In addition, the importance of increased international cooperation with third countries for carbon price discussions was noted.

Once sufficient progress will have been achieved at the Council, negotiations with the European Parliament will be started, after the latter has agreed its position.