Poland refers Carbon Border Adjustment Mechanism (CBAM) mechanism to ECJ; CBAM to impose costs on imported goods with heavy emissions
The Polish government is to challenge the introduction of the EU’s CBAM green policy since it believes it will lead to higher food prices and threaten energy security. Poland is contesting its approval earlier this year via qualified majority instead of unanimity vote. Also, that CBAM conflicts with the principle of energy solidarity.
Separately, the European Commission today adopted the transition implementation regulations for CBAM.
CBAM – stopping carbon leakage
The EU’s CBAM mechanism will oblige importers of carbon-intensive goods to purchase offset certificates via a new Emissions Trading System (ETS) market. The aim is to discourage ‘carbon leakage’ whereby EU companies can avoid EU climate policies and associated costs by importing goods from non-EU countries with lower standards. CBAM will target goods such as: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
It is being phased in from October 2023, with importers having to produce their first reports to January 2024. There will be no requirement to purchase certificates during this transition period. It is expected that it will be fully in force by January 2026, from which time the certificate purchasing is required.
Reporting will be annual, and will require businesses to estimate embedded emission released in the production of their affected CBAM goods. Guidance on methodologies are being drawn up. Importers will annual declare the emissions, and surrender the corresponding number of CBAM certificates. The prices of these is settled on the ETS market.