EU’s new "green tariff" takes effect, targets high-carbon imports

The European Union’s biggest overhaul of green trade rules in decades comes into force today, requiring companies exporting steel, cement, and other high-carbon goods to the bloc to comply with low-carbon regulations—or face fines. The carbon border adjustment mechanism (CBAM) is designed to level the playing field between EU and overseas producers while encouraging decarbonisation, The Guardian reports.

Stéphane Séjourné, the European Commission’s executive vice-president for prosperity and industrial strategy, welcomed the move. “European industrial producers should be encouraged – and not deterred – in their decarbonisation efforts,” he said.

“This CBAM reform brings crucial and long-awaited measures to ensure a level playing field between EU and non-EU industrial producers. By strengthening CBAM, we support our industry’s decarbonisation and secure European players’ competitiveness on the world stage.”

Despite expectations that the EU might soften the rules, the bloc has pressed ahead amid protests from China, the US, Australia, and others. Chinese steel, for example, could lose its price advantage over European products, raising concerns that high-carbon goods might be dumped in markets such as the UK. The UK plans to introduce its own CBAM next year.

Under the EU system, exporters must purchase certificates covering the carbon emissions generated during production. Initially, the rules apply to iron and steel, aluminium, cement, hydrogen, electricity, and fertilisers. Diana Casey, executive director of the UK’s Mineral Products Association, said CBAMs are essential for protecting domestic producers.

“The challenge for us is that the rest of the world is not keeping up in terms of decarbonisation. That’s making production of products like cement much cheaper outside Europe as a consequence,” she said. “We need the CBAM to level that carbon cost playing field. We really do view it as quite fundamental to securing the future of cement production here in the UK.”

While EU industries largely support the CBAM, some warn of higher costs, as free carbon allowances under the EU emissions trading system will be phased out. Adrien Assous, executive director of thinktank Sandbag, said the initial price impact is likely modest. “[The CBAM will have] a superbly beneficial impact for EU decarbonisation,” he said.

The UK has yet to finalize a carbon market linkage with the EU, leaving its companies potentially subject to the CBAM. Wopke Hoekstra, the EU’s climate commissioner, reassured firms: “The price it [the UK] will be paying is actually minimum… once the full linkage has taken place, there is likely nothing in the bookkeeping and nothing in terms of the paperwork that still needs to be done.”

The EU plans to expand CBAM to products containing steel and aluminium from 2028 to prevent regulatory circumvention. A UK government spokesperson emphasized ongoing negotiations to secure exemptions, ensuring green investment benefits both domestic decarbonisation and global climate goals.

By Vafa Guliyeva