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What does the EU put at stake with the introduction of a Carbon Border Mechanism

The implications of an EU Carbon Border Adjustment Mechanism

In devising a Carbon Border Adjustment Mechanism (CBAM), the measure by which a carbon price would be put on imports of certain goods from outside the EU, the European Commission should ask itself what it can do to foster the competitiveness of European industry, not how much of a hit European industry can take and still survive. 

APPLiA, representing the Home Appliance industry in Europe, has already clarified its stance on the CBAM - if such a measure is implemented, it must be extended to finished goods, not just raw materials. “We should not find ourselves in a position where the Commission is choosing which industries it can sacrifice”, stated Paolo Falcioni, APPLiA’s Director General. A tax only on raw materials would damage downstream users of steel, and other raw materials as well. In planning such a tax, we must consider the risk of making the European finished goods industry uncompetitive, and the workers that would be displaced. We must consider the risk of offshoring jobs, of turning Europe into a continent with no industrial champions, into a marketplace that only consumes, but does not produce. 

“Value-added manufacturing, like that which goes on in the home appliance industry, creates highly-skilled, well-paying jobs, and keeps innovation at the heart of European industry.” continued Paolo Falcioni. A tax such as the CBAM, if incorrectly imposed, could actively incentivise manufacturers to leave the EU, leading to a brain drain of the talents needed to build, innovate, and overcome the hurdles of the future - hurdles such as, indeed, decarbonisation. The social and economic implications of such a measure should be assessed alongside financial considerations.

The last few years have been trying for European industry and the current pandemic is exacerbating such pre-existing conditions. Among others, steel safeguard tariffs have made critical materials more expensive and more difficult to source. Brexit has generated business uncertainty across the continent. The COVID-19 crisis has hit European industries, and families, hard.  Especially in these times, European industry must remain a top priority in the political agenda.