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what does the European Union project consist of?

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On Tuesday, March 15, the Member States of the European Union (EU) approved the draft carbon tax at the borders, to come into force between 2023 and 2025. Presented as a flagship tool in the fight against global warming, this tax would aim imports of certain sectors (steel, aluminium) according to the emissions related to their production.

► What is this carbon tax?

The carbon tax is one of the major projects of the EU’s “green pact” towards the objective of “climate neutrality” by 2050. Emmanuel Macron has also made it the climate priority of his presidency of the Union.

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The principle is to impose, like a customs duty, a carbon price on certain imported products manufactured by companies outside Europe. This tax would initially only concern certain sectors (steel, aluminium, cement, fertilizers and electricity), but it could be extended to others at the end of the transition period.

Importers of these products will have to register with national authorities in order to buy carbon allowances, depending for example on the weight of imported steel. If these quotas are exceeded, importing companies will have to pay an additional cost.

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On the other hand, the Twenty-Seven have not decided on the project to simultaneously abolish the free emission quotas allocated to European industrialists to enable them to face competition from third countries, the only way according to Brussels to ensure compatibility with the rules of the World Trade Organization (WTO). States are extremely divided on this issue.

► What are its objectives?

The carbon tax is presented as a key tool in the fight against global warming. Its objectives are multiple. The European Union hopes that this tax will prevent the relocation of emitting companies which, faced with increasingly strict environmental regulations, are tempted to go where the standards are less restrictive. Europe thus wants to avoid importing goods whose production promotes global warming, while itself constraining its industries to demanding standards.

The other objective is to impose European environmental standards on foreign companies and thus encourage other countries to reduce their emissions. Finally, the carbon tax would bring money into the coffers of the Union and finance other projects.

The climate ambitions displayed with this tax are not unanimous. According to the Climate Action Network, this agreement carries the risk of remaining a ” empty shell “. Other experts and NGOs have also strongly criticized the proposals for their lack of ambition and the postponement of the most controversial issues, explains in a statement the European Climate Foundation.

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► When will it apply?

The timetable for the introduction of the carbon tax has not been fully validated. A first resolution was adopted in March 2021, then the European Commission presented a legislative proposal on July 14.

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The agreement in principle reached on Tuesday 15 March by the Member States must now be validated by the European Council on 24 and 25 March next. The European Parliament will then have to decide by the summer on the Commission’s project. Then, the Twenty-Seven will adopt their final position and start talks with MEPs to find a definitive agreement.

The entry into force of the carbon tax is currently scheduled for January 1, 2023. A three-year transition period is planned, during which importers will only have to declare imported emissions without having to buy the necessary carbon allowances.

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