EU lawmakers scrap emergency brake for carbon border levies

The European Union legislators voted on Tuesday to remove a clause that would allow the EU to suspend its border carbon levy in the event it made imported goods more costly. This has led to a conflict with the member countries who support the emergency brake.

The EU's Carbon Border Levy, which went into effect on January 1, imposes fees for CO2 emissions on imports of goods such as steel, fertilisers, and other goods. This is to ensure that these products do not enjoy an unfair advantage over those made in Europe where industries are responsible for their CO2 emmissions.

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

The EU and the European Parliament will now negotiate the final rule, which will extend the border tax 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 a product increases by 50% in six months.

Last year, the European Commission introduced an emergency brake after France called for a suspension of?the carbon tax on fertilisers in order to lower costs for farmers. It has caused controversy, as some companies have warned that it would hurt low-carbon investment and domestic industries. The border levy had been intended to protect them from cheaper imports.

ALUMINIUM LOOPHOLES

The EU also voted to extend the carbon border fee for smaller shipments of aluminum - 5 metric tonnes, instead of 50 tons. This change was designed to ensure that it would apply to imports of low-weight, high-value aluminium parts used in cars, doors and solar panels.

The amendments also included post-consumer scrap aluminium in the carbon tax. The scrap wasn't initially covered by this levy. This led to concerns among European aluminum firms that "foreign suppliers" would use more scrap in order to avoid the EU border fees and gain a competitive advantage against European producers.

Paul Voss is the director general of European Aluminium, an industry association.

(source: Reuters)