In a landmark reform, the European Union (EU) has agreed to a carbon border tax, marking itself as the world’s first and largest such move. The Carbon Border Tax (CBT) is aimed at making the EU economy completely carbon-neutral by the year 2030.
CBT is simply a type of duty which will be placed on imports to the EU based on the number of carbon emissions that have been incurred in the production of a particle item or product. The tax is expected to discourage emissions by putting a price on carbon. With calculations for the carbon prices in place, companies will buy certificates that will contain information on emissions generated during the production process of the imported goods. While free emission allowances will be phased out between 2026 and 2034, they would be first applied to the industries of iron, steel, cement, fertilizers, hydrogen, aluminium and electricity and will eventually be extended to other imported goods.
Even as CBT proves to be a landmark agreement in itself, it’s a part of bigger reforms that is set to cut down emissions in the EU carbon market by 62 per cent by 2030. This larger deal looks at provisions like accelerated emission cuts and phasing out free allowances to industries and fuel emissions from building and transport sectors. Furthermore, the agreement is also slated to gradually make households pay for emissions from fuel and gas heating from the year 2027.
The lead negotiator for the European parliament, Peter Liese said in a statement that the deal is slated to be one of the biggest steps in the fight against climate change at low costs.
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