Trade: Orgalim position on a possible Carbon Border Adjustment Mechanism - CBAM
Published: 10 August 2020
Policies & Issues: Trade, Energy & Climate
Orgalim supports the EU's climate ambition and the goal of carbon neutrality by 2050. To be successful for Europe’s industry, we are advocating for a level playing field. To that extent, we agree with the rationale behind potential carbon border adjustment measures. The main objective of a carbon border adjustment should be to fight climate change by avoiding carbon leakage while at the same time taking into account the competitiveness of carbon-lean industries. Therefore, such measures should also avoid carbon leakage from the EU to third countries. Also, it must not result in non-EU companies redirecting their exports, so that carbon-friendly production increases in the EU while carbon-intensive production is moved outside the EU; this would lead to no overall carbon reductions globally.
Even though we support the rationale, we question the workability of a possible Carbon Border Adjustment Mechanism (CBAM) for our sectors. There are, for example, many concerns about the high bureaucratic impact of the implementation and its costs, as it is very difficult to measure the carbon footprint of an imported complex product, taking into account both the carbon footprint of the final product and its components.
The key Orgalim recommendations to the Commission regarding the design of such a CBAM are summarised below and further detailed in the position paper attached.
1. Trade is key for EU competitiveness - the CBAM should be designed in a non-protectionist way and respect the WTO rules, ensuring markets are, and remain, open for our industries.
2. A multilateral approach for the EU green agenda: coherence between EU trade and climate policies - article 6 of the Paris Agreement aims to promote an integrated, holistic and balanced approach that will help governments in implementing their National Determined Contributions through voluntary international cooperation. This cooperation mechanism, if properly designed, should make it easier to achieve CO2 reduction targets.
3. The cost of a Carbon Border Adjustment Mechanism for complex goods: call for impact assessment - we call on the Commission to work on a proper and comprehensive Commission impact assessment prior to its implementation, taking into account the wider impact on complex goods. Orgalim stands ready to contribute to this debate.
Orgalim looks forward to continuing the dialogue with the European Commission on how to fight climate change by avoiding carbon leakage. However, Orgalim believes that the CBAM might not be the best option to achieve these goals.
Download the document above for reading the full position paper.
Senior Adviser - Trade and Legal
Adviser - Energy and Environment