The European Parliament (EP) has approved proposed simplification changes to the Carbon Adjustment Border Mechanism (CBAM), Kallanish learns.
The changes, first proposed by the European Commission in February, as part of its Omnibus simplification package, include a new lower 50-tonne threshold. While the changes remove 90% of small companies from being liable for the carbon tax, the vast majority of steel companies remain within the scope.
Now approved, EP will move to finalise amendments with the European Council on the regulation.
Despite these changes being approved, Belgium-based climate think tank Sandbag and steelmakers’ association Eurofer have separately released statements calling for further changes.
Sandbag has released a position paper outlining reasons why CBAM should be extended horizontally to more products and vertically to include key precursors such as coke, lime and ferro-silicon, alongside international transport emissions. It says this is essential to close remaining emissions gaps.
This expansion is also needed to support the phase-out of free allocation under the EU Emissions Trading System (EU ETS), which currently fails to incentivise decarbonisation in the EU, it adds.
It has also called for scrap to be included within CBAM’s scope.
Eurofer meanwhile notes CBAM remains full of loopholes that need to be fixed. Failure to do this risks undermining decarbonisation investments, accelerating deindustrialisation, favouring production in third countries, and failing to cut global emissions.
It has created a toolbox on how to fix these loopholes. This includes keeping free allocation for exports to avoid carbon leakage in global markets. It notes that 70% of EU steel exports go to countries with no carbon pricing, therefore making European steel uncompetitive.
Other calls include extending CBAM to steel-intensive downstream goods with a simplified emissions calculation system for complex products.
Additionally, it says the origin of CBAM goods must be set where the steel was melted and poured.
It also notes a loophole where steel-intensive goods such as car components, machinery and household items can be imported without paying any carbon price, which puts EU producers of these products at a disadvantage.
Carrie Bone UK
