A new carbon tariff

Here’s a note from Tim Mohin:

Just in time for Christmas, this week the European Union agreed on a Carbon Border Adjustment Mechanism – CBAM. CBAM is more than just another acronym in the jargon-heavy sustainability world, it’s a new tariff on the carbon ‘intensity’ of products imported into the EU.

The EU parliament stated that CBAM will “equalize the price of carbon…under the EU Emissions Trading System (ETS) and the one for imported goods.” The CBAM will cover a range of goods and sectors such as electricity, fertilizers, aluminum, cement, steel, iron, hydrogen and other products. When finalized, importers will need to buy “CBAM certificates” to make up the difference “between the carbon price paid in the country of production and the price of carbon allowances in the EU ETS.”