Europe Passes The World's First 'Carbon Import Tax', Involving Fastener Products!

The German News Agency reported that the European Parliament approved three important draft EU laws linked to climate change in the "Fit for 55" 2030 climate package: Reform of the carbon emission trading system (ETS), the carbon boundary adjustment mechanism (CBAM, also known as "carbon tariff"), and the social climate fund law (SCF) worth up to 86.7 billion euros.

As the name suggests, the EU's "Fit for 55" project refers to reducing greenhouse gas emissions by 55% compared with 1990 levels by 2030.

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On the 19th, the Committee of Permanent Representatives of the European Council will also pass the CBAM legislation. This means that CBAM is about to take effect.

European Commission President Ursula von der Leyen said the approval by the European Parliament brought the EU to "another milestone". She urged EU member states to give the laws their final approval so they can come into force.

As the world's first legislation to tax the carbon content of imported goods, the regulation will profoundly impact global trade.

CBAM will come into effect in 2026, involving multiple products

For Chinese investors who pay attention to foreign trade and export policies, they will naturally be more concerned about the EU Carbon Tariff Adjustment Mechanism (CBAM) approved by the European Parliament on Tuesday.

According to the announcement of the European Parliament, the commodities covered by CBAM include iron, steel, cement, aluminum, fertilizer, electricity, hydrogen, and indirect emissions under certain conditions. In addition, screws and bolts and downstream products similar to steel products will also be covered.

Merchants who import these goods need to pay the difference between the carbon price in the producing country and the price of carbon allowances in the EU ETS.

CBAM will be implemented gradually from 2026 until 2034. It will be advanced at the same rate as the phase-out of free allowances in the EU ETS.

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During this period, importers only pay for the emissions that European manufacturers do not get for free. The move, aimed at treating domestic and overseas manufacturers equally, is a key reason why Europe has argued that its border tax does not violate World Trade Organization (WTO) rules limiting discrimination against foreign companies.

The bill also creates a parallel ETS II program for fuels used in road transport and building heating, two industries that will have to pay for the greenhouse gases they produce as soon as 2027.

European lawmakers also voted to include the maritime industry in the carbon emissions trading system for the first time, while adjusting the carbon trading system for the aviation industry, phasing out free carbon emission credits by 2026, and encouraging the industry to use sustainable aviation fuel.

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