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On 2 February, ENVI rapporteur Mohammed Chahim presented his draft report on the European Commission’s proposal for EU Carbon Border Adjustment Mechanism (CBAM), stressing the importance of the mechanism for achieving EU’s ambitious climate objectives. While welcoming the overall design of the mechanism, as proposed by the Commission, as a solid starting point for the legislative process, Mr Chahim proposes substantial and important changes to the initial text, aiming to further strengthen CBAM’s climate ambition, its long-term effectiveness and governance.

The rapporteur considers that an enlarged scope and a speedier implementation of CBAM will contribute to the climate objective of the proposal. Amendments also include the appointment of one centralised CBAM authority to manage CBAM, replacing the decentralised system with 27 national CBAM authorities proposed by the Commission, as well as changes to the system of enforcement. In his draft report, the rapporteur also stresses that CBAM should be a system that fosters cooperation rather than confrontation with respect to climate policies and trade. The draft report further emphasises the need to support least developed countries (LDCs) in their decarbonisation efforts as well as to ensure fair and transparent allocation of the revenues collected from CBAM.

The ENVI Committee highlighted the importance of the CBAM mechanism and largely supported many elements of the draft report, including the enlarged scope and establishment of a centralised CBAM authority. MEPs expressed diverging opinions regarding the proposed quicker phase out of the free allowances under the EU ETS and the shortening of the transition period. The need for a predictable and sufficient timeline for business preparedness was emphasised. MEPs also highlighted the importance of meeting EU’s international commitments and ensuring continued multilateral cooperation and climate diplomacy.

MEPs have been asked to submit amendments to the Commission’s proposal by 10 February, followed by negotiations to find common grounds on compromise amendments. It is expected that the ENVI will adopt its report in May, with a Plenary vote scheduled for June.

For more information on the CBAM proposal and legislative process you can read the recently published research briefing on CBAM by the European Parliamentary Research Service.