European Union backs plan to impose carbon emission tax

It will be the world’s first tax, although detailed plans will need to be finalized in upcoming negotiations.

Under the plan, from 2026, the EU will impose a CO2 emission tax on polluting imports, such as steel, cement, fertilizer, aluminum and electricity. Technology now allows to determine quite precisely, how much CO2 will be produced to produce a product. Imported products will have to purchase pollution permits from the EU’s emissions trading system based on volume carbon emissions during production.

The cross-border policy will level the playing field by imposing the same CO2 tax on companies inside and outside the EU. The EU’s imposition of a carbon tax will push foreign businesses to actively improve their production processes to reduce emissions. The emission tax mechanism will be a new source of revenue for the European budget, estimated at 5-14 billion euros per year.

Ms. Ursula Von Der Leyen – President of the European Commission said: “We have chosen to price carbon as a tool of clarity and social compensation. The principle is simple: CO2 emissions must have a price. The price of CO2 encourages consumers and manufacturers to choose clean technology to move towards clean and sustainable products.”

As the trial period to impose the above tax begins in 2023, the EU countries and the European Parliament are rushing to negotiate to approve the regulations this year.

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