Carbon tariffs (CBAM)

The European Commission has published the first official price for Carbon Border Offset Mechanism (CBAM) certificates, set for the first quarter of 2026 at €75.36 per tonne of CO₂. This milestone represents an extremely important (more…)

European Commission launched one of the most important initiatives to strengthen the EU's competitiveness in 2025. Through a series of ten so-called "omnibus" proposals, it seeks to reduction of administrative burden by 25 % for all businesses and by 35 % for small and medium-sized enterprises (SMEs)This (more…)

Carbon Border Offset Mechanism (CBAM) is a European Union regulation aimed at addressing the relocation of production of certain goods to countries outside the EU where carbon costs are lower. Its main objective is to ensure (more…)

The European Commission has definitively approved and implemented significant changes in the Carbon Border Offset Mechanism (CBAM), whose main objective is to reduce administrative and regulatory burdens, especially for small and medium-sized enterprises (SMEs)This proposal, presented (more…)

The European Union has recently successfully completed a legislative process aimed at Simplifying the Carbon Border Offset Mechanism (CBAM)This step, taken as part of the so-called legislative (more…)

The Council today adopted its negotiating position (general approach) on one of the proposals in the so-called "Omnibus I" legislative package, which simplifies and strengthens the EU's Carbon Border Offsetting Mechanism (CBAM).

The proposal aims to simplify and cost-effectively improve compliance under the CBAM Regulation without compromising its climate objectives, as it would cover approximately 99 % of emissions in imported CBAM goods. The overall objective is to reduce regulatory and administrative burden , as well as compliance costs for EU companies, especially small and medium-sized enterprises. (More on consilium.europa.eu)

As part of the Omnibus package, the EU Commission has proposed simplifications and improvements to the CBAM Regulation. The proposal aims to simplify and increase the cost-effectiveness of the CBAM Regulation while ensuring that its environmental objectives and the main principles of the proposal remain intact. . Key measures aim to simplify compliance for importers by streamlining reporting requirements, especially those involving complex calculations and extensive data collection.

Before the EU proposals become legally binding, they must go through the regular legislative procedure at European level. Until this is achieved, every importer of CBAM goods should register as an authorised CBAM declarant in the CBAM register, which is possible from 31 March 2025. Details are provided below. (Leonard Freiherr von Rummel, more at lexology.com)

On 26 February 2025, the EU Commission presented the first comprehensive reform package aimed at simplifying and increasing the competitiveness of European industry. (more…)

The European Union is introducing the CBAM (Carbon Border Adjustment Mechanism), which imposes a carbon cost on importers. This move incentivizes manufacturers to decarbonize in order to remain competitive in the market. (more…)

More than two decades ago, the World Trade Organization (WTO) was created.WTO) with the proposition that free trade between nations improves overall economic welfare. The task of regulating trade between nations was entrusted to the WTO and governed by the General Agreement on Tariffs and Trade (hereinafter referred to as the "GATT"). GATT ") formulated in 1948. GATT provided a basic set of rules governing international trade. The GATT preamble envisioned a substantial reduction in tariffs and other trade barriers, together with the elimination of preferences on a reciprocal basis among all signatory countries. With this intention, GATT became the main document on which member countries relied for international trade. (Shankey Agrawal, Harsh Shukla, Pratha Khanna, more at lexology.com)

The United Nations (UN) is proposing a cryptocurrency mining tax of $0.045 for every kilowatt hour (kWh) of electricity used for mining. This proposal aims to mitigate the environmental impact of the crypto industry and to finance climate projects.

Energy intensity of cryptocurrencies

Cryptocurrency mining, especially Bitcoin, is among the biggest consumers of energy in the digital world. In 2023, the annual energy consumption for Bitcoin mining reached approx 120 terawatt hours (TWh), which is comparable to the annual consumption of countries such as Norway or Argentina.

• Comparison: A single Bitcoin transaction uses approximately 1,400 kWh of energy, which is the amount an average household would use in 47 days.
• Energy sources: Much of the energy used for mining comes from non-renewable sources, especially in regions with cheap electricity such as China, Russia or Kazakhstan.

Objectives of the proposed tax

The UN proposal pursues two main objectives:

1. Reduction of environmental impact: Incentivize cryptocurrency miners to switch to renewable energy sources or less energy intensive technologies such as "Proof of Stake".
2. Financing climate initiatives: Revenue from the tax could finance projects to promote renewable energy, protect biodiversity and mitigate climate change.

Challenges and concerns

1. Global implementation: Cryptocurrency mining is decentralized, which makes it difficult to coordinate taxation between individual countries.
2. Reaction of miners: Many could move their operations to countries with little or no environmental regulation, increasing their carbon footprint.
3. Innovations in the sector: The industry is already working to reduce energy consumption. Ethereum has reduced its energy consumption by more than 99 % by switching to "Proof of Stake".

Impact on industry and the environment

If the tax were to be successfully introduced:

• Motivation for sustainability: Miners could start using renewable energy sources more.
• Climate benefit: According to the UN, the revenues could finance projects that will reduce global greenhouse gas emissions by up to several million tons of CO2 per year.
• Technological shift: The tax could accelerate the development of more energy-efficient blockchain solutions.

The UN proposal emphasizes the need to address environmental issues associated with the growing crypto industry. Although implementing a global cryptocurrency mining tax will be difficult, its potential benefits for climate and technological progress could be significant. Spring

The European Commission's Directorate-General for Taxation and Customs Union (TAXUD) is conducting a study on the possible extension of the scope of CBAM to downstream products. The objective of this study is to assess the feasibility of extending the scope of CBAM to products further down the value chain (products downstream of goods) currently listed in Annex I of the CBAM Regulation (core goods of CBAM at the beginning of the supply chain).

The purpose of including downstream products is to mitigate the risk of carbon leakage for both CBAM core goods and downstream products. (More on eurometal.net)

The European Union already has rules for pricing the CO2 emissions of certain goods. Some businesses sourced their materials from outside Europe because such rules either do not exist there or are less strict. As a result, producers do not have to take CO2 taxes into account when calculating their costs. The EU has called this situation undesirable because production is moving outside of Europe, which is also against the EU's environmental goals. That is why the EU is introducing a mechanism of fees for CO2 emissions from goods produced outside Europe.

How CBAM works

Companies that import goods from outside the EU will have to pay a fee for CO2 emissions arising from the production of these goods.

From 2026, companies must cover these emissions using so-called CBAM certificates. One certificate represents one ton of CO2 emissions. The ultimate goal is for manufacturers to adopt greener production methods and reduce global CO2 emissions. (More on lexology.com)

The "transition phase" to the new CO2 cap adjustment mechanism, or "CBAM" for short, runs from October 2023. Importers of certain high-emitting goods such as steel, iron, aluminium, cement, fertilisers, electricity and hydrogen must submit quarterly goods reports to the CBAM imported from other EU countries in the previous quarter and the CO2 emissions generated during the production of these goods (the basis and method of operation of CBAM can be found in our overview . CBAM reports are used to gather information for the start of the main phase of CBAM: from 2026, the price of reported CO2 emissions will gradually increase. ( Rebekka Ackermann, more at lexology.com)

This paper explores potential synergies between the European Union's Carbon Boundary Adjustment Mechanism (CBAM) and Article 6.2 of the Paris Agreement. Since CBAM has the potential to influence global markets and confront new economies, its integration with Article 6 para. 2 could provide a path to collaborative and effective global climate action. CBAM, which aims to level the playing field for EU industry by introducing a carbon price on imports, is aligned with the pricing of the EU Emissions Trading System (EU ETS) and is due to fully start in 2026. The mechanism seeks to protect EU industries from non-EU industries that externalize the cost of carbon production, while encouraging non-EU countries to introduce carbon pricing mechanisms in line with global agreements. (Ruth Dawes, more at lexology.com)

China is a world leader in green industrial transformation, driven by its dominant position in solar photovoltaic panels, high-quality yet low-cost electric vehicles (EVs), and EV batteries. Thanks to the government's long-term policies and sophisticated, distinctive and innovative SMEs, its low-carbon transformation will help achieve quality development.

However, two obstacles stand in the way of China's decarbonization. First, China is not alone in pursuing decarbonization, and many countries are not on the path to realizing decarbonization. Until all countries' decarbonisation plans are in line with the Paris Agreement, limiting the global temperature rise to below 2 degrees Celsius (let alone 1.5°C) will not be possible. Although commentators will continue to complain about China's overcapacity in green products, the real problem is low global demand for such products. Second, while China has made remarkable strides in renewable energy and electric vehicles (EVs), it can further increase its efforts to achieve climate goals by reducing its reliance on coal. (Adrien Fabre and Hu Bin, more at chinadaily.com.cn)

Anyone importing high-emitting goods into the EU will in future have to purchase CBAM certificates to offset the difference between the cost of CO₂ emissions in the country of production and the price of CO₂ certificates in the EU.

The European Carbon Border Adjustment Mechanism (CBAM) is one of the cornerstones of the EU's "Fit for 55" package. This includes a series of measures aimed at reducing greenhouse gas emissions by at least 55 % by 2030.

By introducing CBAM, the EU aims to promote a more cautious approach to CO₂ emissions worldwide, but also to limit any economic disadvantages caused by "CO₂ leakage", i.e. the migration of industries to countries with less stringent CO₂ emission regulations.

Specifically, anyone importing high-emission goods into the EU will have to purchase CBAM certificates in the future to offset the difference between the cost of CO₂ emissions in the country of production and the price of CO₂ certificates in the EU.

There is one important exception: Swiss goods (origin) are exempted from CBAM regulation and thus also from CBAM certificates!

The legal basis was laid down in Regulation (EU) 2023/956. This was clarified on 17 August 2023 by Implementing Regulation (EU) 2023/1773 for the transitional phase.2. (Adrian Peyer, more at lexology.com)

The Carbon Boundary Adjustment Mechanism: An Overview of the Technical and Practical Aspects of the Transitional Registry. Climate change is a global problem that requires global solutions. As the EU increases its own climate ambitions, and as less stringent climate policies prevail in many non-EU countries, there is a risk of so-called "carbon leakage". Carbon leakage occurs when EU-based companies move carbon-intensive production abroad to countries with less stringent climate policies than in the EU, or when EU products are replaced by higher-carbon imports. (More on taxation-customs.ec.europa.eu)

According to the EU, carbon leakage occurs when businesses move industries to or import products from countries with less stringent environmental policies, apparently circumventing the European Union's costly climate policies.

Before getting to the basics of CBAM, it is essential to clarify the EU climate policies that have contributed to carbon leakage in the first place.

The genesis of CBAM

The EU is constantly striving to be at the forefront of reducing greenhouse gas emissions. This ambitious goal has become a fundamental aspect not only of CBAM, but also of the European Union Emissions Trading System (hereinafter referred to as " EU ETS ”), leading to the creation of one of the world's first major carbon trading markets. The EU ETS is a system within the European Union that penalizes carbon-intensive production of products and stimulates low-carbon emissions. (Aayush Rastogi, more at lexology.com)

From 1 August 2024, businesses importing goods into the European Union (EU) will have to adapt their carbon emissions reporting to significant changes. These changes are part of (more…)