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On June 22, 2022, the European Parliament (EP) approved the amendments of Carbon Border Adjustment Mechanism (CBAM), which will come into force on January 1, 2023.
The CBAM proposal was passed by the EP on July 14, 2021, and a more ambitious amendment on CBAM presented by the Committee on the Environment, Public Health and Food Safety (ENVI) was approved on May 17, 2022. (ChemLinked News)
It is only one month since the last amendment which reflects a strong commitment to implement the CBAM. The EP proposed to cover more sectors and include indirect emissions to strengthen the control of greenhouse gas (GHG) emissions. However, in order to balance the ambitious climate goals and the need for time for the EU industry to transform, the EP prolonged the transitional period to the end of 2026 and specified the implementation of free allowances in a phase-in period: 100% in the period 2023-2026 (transitional period), 93% in 2027, 84% in 2028, 69% in 2029, 50% in 2030, 25% in 2031 and the end of free allowance by 2032.
The major amendments of CBAM are summarized in the table below.
Table 1: Amendments of CBAM
Item | July 2021 Proposal | May 2022 Amendments | June 2022 Amendments |
Scope of Products | Iron and steel, aluminum, refineries, cement, and fertilizers. | Adding organic chemicals, hydrogen, and polymers. | Adding organic chemicals, plastics, polymers, hydrogen and ammonia. |
Scope of Emissions | Direct emissions (Annex I) | Adding indirect emissions (Annex II) | Adding indirect emissions (Annex II) |
Transition Period | Until December 31, 2025 | Until December 31, 2024 | Until December 31, 2026 |
Free Allowance | By 2035 | By 2030 | By 2032 |
Executive Body | 27 CBAM authorities in each EU Member State | A centralized EU CBAM authority | A centralized EU CBAM authority |
