EU lawmakers scrap emergency brake for carbon border levies

The European Union lawmakers voted Tuesday to scrap a clause which would allow the EU to suspend its border carbon levy in the event that it increases the price of imported goods. This could lead to a conflict with other member countries who support the emergency brake.

The EU's Carbon Border Levy, which went into effect on January 1, imposes CO2 emission fees on imports such as steel, fertilisers, and other goods to ensure that they don't have an unfair edge over products made in Europe where industries pay their CO2 emissions.

The European Parliament voted Tuesday to delete a clause which would have allowed the EU in the future to temporarily exempt goods from levy if "serious and unforeseen circumstances" increased the price of these goods. They proposed instead using the revenue from the border fees to compensate industries in the event that the scheme increases prices.

The EU countries and European Parliament will now be negotiating the final rules which will extend the border 'fee' to new products such as washing machines and auto parts.

The EU wants to retain the option of suspending the carbon tax under certain conditions, such as if the price of the product increases by 50% in six months.

Last year, the European Commission proposed an 'emergency brake' in response to a call from France to suspend its carbon fee on fertilizers to lower costs for farmers. The proposal has caused controversy, as some companies have warned that it would hurt low-carbon investment and domestic industries which were supposed to be protected from cheaper imports.

(source: Reuters)