For several years the European Union has been dealing with the issue of limiting CO2 in Europe, and European companies now have to buy emission allowances. Businesses from China, Russia and other countries are therefore at an advantage. At the end of last year, representatives from EU Member States and the European Parliament agreed on a solution to this issue, in the form of a carbon tax. The purpose of the agreement is to try to match the prices of products subject to carbon charges within the EU with the prices of comparable goods imported from countries outside the European Union. EU institutions have reached an agreement on the fifth proposal in the “Fit for 55” climate package, which aims to reduce greenhouse gas emissions in the European Union by 55 % by 2030.
Who will pay the carbon tax?
Under the current draft agreement, carbon tax will be paid by companies importing selected goods from third countries.
What goods will be subject to the carbon tax?
The European Commission first of all proposed that a carbon tax would be levied on imports of iron, steel, aluminum, hydrogen, cement, fertilizers and electricity, as well as their compounds. During negotiations the list was expanded to also include certain raw materials which are used in the production of these commodities, as well as selected metal products (for example screws, bolts).
Who will be able to import the selected commodities?
According to the current proposal, the selected list of goods and commodities will only be able to be imported by companies that have an established “authorized declarant” in the European Union, which will make an annual declaration containing information on such imported goods. Companies will be required to make this report from October of this year.
In this way, the European Union wants to use the carbon tax to limit CO2 leakage without breaking the rules set by the World Trade Organization and to balance the burden on products regardless of whether they are produced in the EU or imported from third countries.