EU’s new ‘green tariff’ rules on high-carbon goods come into force

cross-posted from: https://scribe.disroot.org/post/6425504

Archived version

• As of 1 January 2026, the so-called 'green tariff' rules come into force, effecting high-carbon products like high-carbon products like steel, aluminium, and cement
• Also called carbon border adjustment mechanism (CBAM), it creates a level playing field between the EU and overseas competitors like U.S. and particularly China, where environmental standards are much lower than in Europe
• EU businesses already pay for carbon pollution under the bloc's emission trading system

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The biggest shake-up of green trade rules for decades comes into force today, as companies selling steel, cement and other high-carbon goods into the EU will have to prove they comply with low-carbon regulations or face fines.

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Companies should welcome the carbon border adjustment mechanism (CBAM), which aims to create a level playing field between the EU and overseas competitors, said Stéphane Séjourné, the European Commission’s executive vice-president for prosperity and industrial strategy. “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.”

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Chinese steel could lose its price advantage over European steel, for instance. However, that could create a glut of steel and other high-carbon products, which some fear could be dumped at low prices into the UK and other markets instead. The UK is expected to bring in its own CBAM next year.

Under the EU rules, exporters to the bloc can buy certificates to cover the carbon emissions generated in the production of their goods. The CBAM is intended to make sure that competitors from countries with poor environmental standards cannot undercut EU businesses and to prevent “carbon leakage”, when producers move to regions with lax regulations because those countries have a cost advantage.

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Initially, the rules will cover iron and steel, aluminium, cement, hydrogen, electricity and fertilisers.

CBAMs in Europe and the UK would help to protect domestic producers, said Diana Casey, the executive director of the Mineral Products Association in the UK, which includes cement 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.

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