Industry has continued to urge a more comprehensive export adjustment under the EU carbon border adjustment mechanism (CBAM) following the European Commission's announcement of a forthcoming proposal yesterday, with some calling for full free emissions trading system (ETS) allocations for production destined for exports. Norwegian fertilizer firm Yara said the CBAM solution is "not good enough".
The commission yesterday announced plans to reduce the risk of carbon leakage for goods exported from the EU in CBAM sectors under proposals to be presented by the end of the year, with the aim of providing equal treatment for all goods, whether produced, sold in the EU, or imported and exported.
The commission's stated plans are "not good enough" for Monica Andres, Yara's executive vice-president for Europe. "We need a watertight and timely CBAM implementation to level the playing field with more carbon-intensive imports," Andres added, noting the commission's new proposal does not offer sufficient predictability and leads to an "incomplete" CBAM applying from 1 January 2026.
"We would have preferred a solution which maintains full free allocations for the part of the production destined for exports," said BusinessEurope director general Markus Beyrer, adding CBAM is "untested and still incomplete" in its design.
European steel association Eurofer said the commission's announcement on CBAM exports lacks the actual legal proposal and details on its design. CBAM sectors had proposed a simple mechanism based on free allocation for exports, Eurofer said, noting a "very limited" impact in reversing industrial decarbonisation given the proposed EU greenhouse gas reduction target of 90pc by 2040 against 1990 levels.
Refinery industry association FuelsEurope has similarly called for any CBAM changes to maintain sufficient levels of free carbon allowance allocations and include measures to protect exports, if the measure's scope is extended to the refining sector.
The scope of the mechanism so far includes cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. The commission is consulting until 26 August on extending CBAM's scope to some downstream products and on circumvention risks. EU states and the European Parliament recently agreed to CBAM revisions exempting some 90pc of originally covered EU companies from reporting obligations.
