EU moves to phase out allowances for heavy carbon emitters
More than 40% of SA’s exports to the bloc are directly exposed to the so-called cross-border adjustment mechanism
EU negotiators have tentatively agreed on new rules to govern the cross-border adjustment mechanism (CBAM) — a plan that calls for phasing out allowances for heavy carbon emitters.
The agreement, to be implemented in October, still needs to be confirmed by EU ambassadors and the European Parliament.
The mechanism will introduce a levy on greenhouse gases embedded in products imported into the EU to stop industries from shifting production to jurisdictions with weaker carbon pricing and regulation.
More than 40% of SA’s exports to the bloc are directly exposed to the CBAM, in particular petrochemical, pulp and paper, motor vehicles, metals, and ferroalloys.
In a 2005 arrangement, businesses in so-called dirty industries or carbon-intensive sectors — such as cement, fertilisers, steel and aluminium — were offered subsidies to ensure they kept production and jobs in the EU rather than to countries outside the trading bloc. That arrangement will be phased out as the CBAM is implemented
“It [the CBAM] would be phased in gradually, in parallel to a phasing out of the free allowances, once it begins under the revised EU emissions trading system (ETS) for the sectors concerned. This will ensure compatibility of CBAM with international rules on trade,” the EU said in a statement.