EU COUNCIL ADOPTS GENERAL APPROACH ON CBAM
On 15 March, the EU Council reached an agreement (general approach) on the Commission’s proposal for EU Carbon Border Adjustment Mechanism (CBAM), which has received major support by EU Member States as a tool to support EU’s climate objectives.
The general approach contains a number of important amendments, including an extension in the scope of CBAM whilst remaining within the initial sectors covered by the Commission’s proposal (cement, fertilisers, aluminium, iron and steel, and electricity). The Council also amends the stakeholder setting by introducing a distinction between the ‘customs declarant’ and the ‘authorised CBAM declarant’ and trying to clarify the role of the customs representative when it comes to CBAM obligations.
Other amendments under the general approach concern the enforcement of CBAM, which relies on penalties, unlike the Commission’s proposal which allowed for the imposition of administrative and criminal charges. Additionally, the Council opts for an increased centralisation of the CBAM governance, by introducing a new registry of CBAM declarants at EU level. This approach, however, is less ambitious than the EP ENVI Committee’s draft report on the proposal, where a central CBAM authority was put forward. The Council also foresees a minimum threshold which exempts from the CBAM obligations consignments with a value of less than €150, aiming to reduce administrative complexity.
The Council still has to make sufficient progress on a number of issues which are closely related to CBAM but not part of the draft legal proposal. This concerns in particular the phase-out of the free allowances allocated to industry sectors covered by the CBAM; appropriate solutions on the issue of limiting potential carbon leakage from exports; CBAM revenue distribution and ensuring WTO compatibility. Once sufficient progress is achieved within the Council, the Council will start negotiations with the European Parliament, after the latter has agreed its position, expected in June 2022.
Source: EU Council