European Union Clinches a Deal on a Carbon Border Tax
Members of the bloc agreed on how to create a tool that will force foreign companies to pay for the cost of their carbon emissions. The tax is a key element of the EU’s climate emissions goals, but trading partners accused Brussels of protectionism.
"From 2027 on, it's crunch time. Everybody needs to reduce emissions by then or will have to pay a lot," said the lead negotiator for the European Parliament, Peter Liese.
The EU will phase out free CO2 permits by 2034, deeming them no longer necessary to protect European producers from overseas competition after it also approved a so-called carbon border tax targeting that same competition of producers from jurisdictions with lower emission standards than the bloc.
The EU also will be gradually reducing the number of CO2 permits available for purchase in a further effort to stimulate investment in low-carbon energy. Some 90 million permits will be removed from the system in 2024, followed by another 27 million in 2026.
The carbon deal is provisional and has to be approved by the European Parliament and the Council of Europe.
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