Brussels green taxes, CBAM to prompt energy market changes

Tax incentives for eco-friendly energy technologies and disincentives for polluting energy sources such as carbon and petroleum products, feature in the European Commission’s imminent package of eco-related taxes, while, for trade relations with non-EU countries, a Carbon Border Adjustment Mechanism will include penalties for a series of imports, including electricity.

The package of tax incentives, to be announced on July 14, will prompt major changes in Europe’s energy market, hastening developments towards a greener economy. Without a doubt, reaction by unhappy players can be expected.

Lignite will become an even more costly energy source as a result of the measures. Gasoline, other auto fuels and heating fuels may be spared of extra levies as existing Greek fuel tax rates are already among Europe’s highest, well over the EU average.

Implementation of the tax measures may take until 2023 as European Parliament and the EU-27’s national parliaments will all need to ratify the package before it can be introduced.

The arrival of these tax measures is expected to immediately lift carbon emission right prices to even higher levels. Already soaring, they exceeded 53 euros per ton yesterday, and, according to analysts, could end up reaching as high as 100 euros per ton, as was noted by power utility PPC’s chief executive Giorgos Stassis, at yesterday’s Delphi Economic Forum.

Beyond the EU borders, the European Commission will introduce a Carbon Border Adjustment Mechanism, to apply for the EU’s relations with non-EU members. This mechanism could spark political tension, even trade wars.

It will aim to protect European industry from unwanted competition in sectors such as the energy, steel, aluminium, cement and fertilizer industries by increasing the cost of imports from non-EU areas and countries without CO2 right markets, such as the west Balkans, Turkey, India and China.

The CBAM is also expected to be introduced in 2023.

EU lawmakers vote in favor of carbon levy on certain imports

EU lawmakers have adopted a resolution for a carbon levy on certain imports from less climate-ambitious countries, with 444 votes in favor, 70 against and 181 abstentions.

Through the adoption of a Carbon Border Adjustment Mechanism (CBAM), to be implemented in 2023, the aim will be to create a global level playing field and prevent carbon leakage, which could create competitive disadvantages for European industrial producers.

The resolution underlines that the EU’s ambitious climate change targets should not lead to carbon leakage as global climate change efforts will not yield results if European production simply relocates to non-European countries with less ambitious emission standards, European Parliament announced in a statement.

European lawmakers, therefore, are in favor of a carbon tax on goods from non-EU countries that have not set ambitious targets for tackling climate change, as the EU has done with its ETS emissions trading system.

Besides creating a level playing field worldwide, the resolution should also serve as an incentive for both European and non-European industries to accelerate decarbonization procedures in line with the Paris Climate Agreement objectives.