The EU plans to extend its carbon border tax to cover 180 downstream products like washing machines and car parts, aiming to protect its manufacturers from higher costs.
BRUSSELS: The European Union plans to extend its environmental levy on imports to cover scores of products made with steel and aluminium, including washing machines and car parts.
The European Commission unveiled the proposal on Wednesday to tackle concerns that its existing Carbon Border Adjustment Mechanism (CBAM) could raise costs for EU manufacturers.
The current CBAM tax targets carbon-intensive goods like aluminium, cement, electricity and steel from countries with lower environmental standards.
It aims to level the playing field for European industries subject to strict emissions rules.
Brussels worries the current system could cause some manufacturers to move factories to countries with less stringent environmental requirements.
To address this, the commission proposed extending the tax’s scope to cover 180 steel and aluminium-intensive downstream products.
“European industrial producers should be encouraged – and not deterred – in their decarbonisation efforts,” said EU industry chief Stephane Sejourne.
Most of the newly targeted goods are industrial products like metal mountings, wiring and cylinders.
The list also includes some household goods and appliances like washing machines.
CBAM is set to fully enter into force in January after a two-year transitional period.
Its goal is to make foreign companies pay the same as EU producers under the bloc’s internal emissions trading system.
Importers must declare the CO2 emissions embedded in the production of goods abroad.
If they exceed EU standards, firms are required to purchase emission certificates at the EU carbon price.
The levy is expected to generate 1.4 billion euros (USD 1.2 billion) annually for the EU.
The commission said it wants to use 25% of the profits over the next two years to support EU makers of targeted goods through a dedicated fund.
The proposals need to be approved by the European parliament and member states.
