An EU Carbon Border that works for the EU

EU carbon border adjustment: how to prevent carbon leakage and ensure EU industrial competitiveness? APPLiA participated in the Roundtable webinar.

With discussions on an EU Carbon Border Adjustment Mechanism (CBAM) ongoing, experts are debating the complications linked with the introduction of such measures  for the competitiveness of  EU industry. “The Home Appliance Industry fully supports the EU Green Deal goals”, Paolo Falcioni, APPLiA Director General, said. “What we have to keep in mind is the global dimension of the problem and the global dimension of the Industry”. By taking shortcuts we would risk penalising actors in a global value chain. 

For instance,  the implementation of a tax on raw steel imports alone would in fact directly penalize downstream steel manufacturers who fabricate products in the EU. Leaving imported finished goods untaxed while taxing raw material imports when entering the Single Market would make EU-produced products more expensive by comparison. “Such a measure would actively damage the goal of decarbonization” continued  Paolo Falcioni, at the CBAM roundtable webinar co-hosted by APPLiA, “by promoting a surge in sales of non-European and potentially  carbon-intensive products”. In response, EU manufacturers would be incentivised to leave the EU to avoid the aforementioned unfair mechanism, leading to weakening of the EU’s industrial strength, while also contradicting the EU’s competitiveness objectives outlined in the Industrial Strategy. 

An EU Carbon Border Adjustment Mechanism needs to take market dynamics into account and must therefore be introduced for finished products to avoid goods produced outside Europe entering under favoured conditions. Green steel production, clean energy sources and stimulating demand for low-carbon products are some of the many opportunities for the EU to pursue decarbonization without damaging European industry.