EU makes it harder to suspend carbon tax on imports

The European Union countries agreed to limit the circumstances in which they can suspend the carbon emission fee on imported goods. This could help to increase the certainty of low-carbon investment in the EU.

The majority of EU economic ministers supported the plans, even though countries such as Slovakia, Romania, and Lithuania declined to support them.

The EU carbon border tax imposes an additional fee for emissions resulting from imports such as fertilisers and steel. This policy is a world first and aims to protect European industry from being undercut by cheaper, more pollution-producing goods imported from abroad.

The European Commission initially proposed that goods could be exempted from the carbon tax?in the future if "serious, unforeseen circumstances", which were not specified, resulted higher prices. Some governments and companies have rejected this approach, claiming it creates uncertainty for low carbon investments which are only competitive when polluting imported are subject to EU emissions fees.

The draft ministers' agreement seen by said that the Commission can only propose suspension of the carbon fee if certain criteria are met. For example, the price of the product in question must have increased by at least 50% within the past six months compared to the average of the previous 10 years.

The final rules will be negotiated by EU countries and their legislators. EU lawmakers plan to'reduce or'remove the entire suspension clause. After the Iran War drove up costs, France called for the EU Carbon Fee to be suspended for fertilisers in order to help farmers.

The?deal was approved on Friday after the department received concessions which would benefit French overseas departments Guadeloupe & Martinique. These concessions allow?these territories to import cement without paying a charge in times of natural disasters & other emergencies. Once finalised, the proposals will include washing machines, car parts, and other products in the list of goods that are covered by the carbon tax. (Reporting and editing by Barbara Lewis; Kate Abnett)

(source: Reuters)