In a new analysis, leading rating agency S&P Global warns that the EU’s external climate tariff CBAM, which stands for “Carbon Border Adjustment Mechanism” will hit developing economies the hardest.
“Phasing in from 2026, CBAM will levy a carbon tax on imports of selected energy intensive materials and products into the EU, removing the gap between the EU’s ETS carbon price and the export country of origin’s carbon price.
Analysis by S&P Global Commodity Insights shows Canada, Brazil, South Africa and Turkey will be most exposed to the mechanism, with iron and steel by far the biggest sector targeted.”
Developing economies hit hardest by EU’s carbon border tax #CBAM
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— Francisco Beirão (@fbeirao) February 27, 2023
Only on 9 February, the European Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) voted in favor of the EU’s Carbon Border Adjustment Mechanism (CBAM), as it received 63 votes in favour, with seven MEPs opposing the carbon tariff.
The MEPs also supported to revise the EU’s Emissions Trading System, which includes major carbon market reforms, whereby this domestic EU “climate tax” will be expanded to more economic sectors. 57 MEPs reportedly voted for the ETS reform while 13 voted against it, with six abstentions. As a result, the legislation is pushed closer to formal adoption.