EU countries agree to exempt most firms from carbon border tariff

European Union countries backed plans on Tuesday to scale back the bloc's carbon border levy to cover just 10% of the companies currently included in the scheme, arguing that these firms account for nearly all of the emissions involved.

 

Their approval makes it highly likely that the EU will exempt most of the 200,000 importers who were initially set to face the world’s first carbon border tariff, due to take effect next year.

 

EU countries must still negotiate final changes with the European Parliament, which said last week it would support the proposals. Ministers from EU countries approved the proposed changes at a meeting in Brussels on Tuesday.

 

The EU's carbon border tariff is intended to protect European producers from cheaper foreign rivals operating under weaker climate regulations. It will impose a fee on imported goods, equal to the carbon price paid by EU-based companies under the bloc's CO₂ emissions rules.

 

The European Commission proposed the changes in February, saying they would reduce bureaucracy for smaller businesses without weakening the policy’s environmental impact. The 10% of importers who remain covered are responsible for over 99% of the emissions affected by the policy.

 

Under the revised rules, the carbon tariff will apply to companies importing more than 50 metric tons per year of goods such as steel, cement, aluminium, and fertilisers.

 

This would replace the original threshold, where anyone importing goods worth more than €150 ($170) would have had to pay the levy starting next year.

 

From 2027, companies will be required to buy permits to cover the carbon emissions of imports made from the year 2026 onwards.

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