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On 9 September, the ENVI Committee of the European Parliament also discussed another key proposal of the Fit for 55 Package delivering on the Green Deal; the Carbon Border Adjustment Mechanism (CBAM). Mr Gerassimos Thomas, Director-General of DG TAXUD, presented the proposal stressing the need for a CBAM to ensure that EU efforts are matched by trading partners and incentivise foreign producers to adopt environmentally friendly processes. While MEPs widely supported the initiative, they also raised various concerns relating to, inter alia, the disappointing limited scope of the proposal, the rather long transition period and need to more quickly phase-out free allowances. They also addressed issues relating to competitiveness of EU business, especially SMEs, risks of international trade retaliation and undermining international dialogue on climate policy.

The Commission noted that the scope of the CBAM will be widened but remain within sectors at high risk of carbon leakage and that the transition period for application of the new measure will provide both authorities and industry with an opportunity to carefully review its application, as well as time to adjust. The Commission also reassured members of the ENVI Committee that sufficient funds for green investments will be secured to support industry green and modern transition, and that the balanced, proportionate and fair approach of the proposal made it compatible with international trade rules and third countries’ climate measures.