BERLIN (Reuters) – Industrial companies in the EU may be able to count on free carbon permits until 2035 but on a reduced scale, the Frankfurter Allgemeine Zeitung (FAZ) reported on Tuesday, citing a draft of climate policy reforms that the European Commission wants to phase in.
Industry still receives about 80% of its CO2 emission rights from the European Union for free, benefiting the steel, cement and chemical sectors in particular.
But the Commission intends the “Fit for 55” package of climate policies that it will present on July 14, including carbon market reforms, to ensure that the EU reduces emissions by 55% by 2030 compared to 1990, as planned.
The package will include a carbon border adjustment mechanism (CBAM) or CO2 tariff on polluting goods, forcing some companies importing into the European Union to pay carbon costs at the border.
According to the draft quoted by the FAZ, this CO2 tariff is to be introduced gradually over 10 years from 2025. In parallel, the free allocation of CO2 rights within the EU would be reduced to 50% by 2030 and to zero by 2035 “at the earliest”.
The idea is to prevent carbon leakage – or the phenomenon of European firms relocating to countries with less costly climate standards – by levelling the playing field between production in Europe and potentially cheaper but more polluting manufacture of products such as steel and cement elsewhere.
(Reporting by Paul Carrel and Markus Wacket; Editing by Kevin Liffey)
