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Position IFIEC on the Carbon Border Adjustment Mechanism (CBAM)

Klimaat Beleid en toezicht, Wet- en regelgeving, Emissie21 april 2022Jacques van de Worp

Openstatement by energy intensive industries ENVI Committee vote on Emissions Trading System and Carbon Border Adjustment Mechanism (CBAM). IFIEC supports the discussion to improve carbon leakage protection for the European industry in light of increased climate ambition.

Energy-intensive industries (EIIs) provide direct employment to around 2.6 million people and represent the foundations of critical and strategic value chains for the EU economy and society. Wesupport the objectives of the European Green Deal and companies in our sectorsinvest in concrete projectsacross a range of technological pathwaysto deliver deep emission reductions. WhiletheEU’sclimate transition has assumed also a more urgent and larger geopolitical dimensionsince theRussian attackagainstUkraine,its short-medium term implementation for EU industry is more challenging than ever. Skyrocketing energy prices, high inflation, soaring carbon prices and raw materials shortagesareunprecedented challenges that have already led to production curtailments and stoppages may cause further disruptions in the near future.Another economic downturn, the third in just four years, is looming.

In this new context,it is essential thatthe implementation of the Fit for 55 Package and in particular the Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM)deliver the agreed 2030climate targetswhilesupporting companies’ investments,preserving effective carbon leakage measures and avoiding disproportionate costs, capacity closures andjoblosses.Higher climate ambition needs to be achieved cost effectively and be accompanied by strengthened carbon leakage protection from international competition that is not subject to comparable carbon costs, if anycostsat all.

The commission’s as well as the ENVI proposal, however, raise concerns that IFIEC would like to comment on. More clarifications are needed, which requires a more cautious, stepwise approach. An extended evaluation phase should allow for a detailed Impact Assessment, based on clear design parameters, before a decision regarding coverage of a specific value chain by a CBAM is taken.