CBAM: WTO compatibility and continuity of free allowances are essential

This week, the European Parliament will vote on a report on a Carbon Border Adjustment Mechanism, in support of the EU's efforts to go climate-neutral by 2050 while preventing Europe's effort from being undermined by lower ambition of our international partners.

Ahead of the European Parliament vote BusinessEurope Director General Markus J. Beyrer underlined: "We are looking closely into the idea of a Carbon Border Adjustment Mechanism. While the scope and impact will depend on the chosen design, WTO compatibility will be essential to engage our trading partners to match our ambition and to minimise the risk of harmful retaliatory measures. Most importantly, we must ensure our companies’ competitiveness by maintaining existing measures, like the free allowances under the EU ETS, at least as long as the new mechanism is in a testing phase and has not yet proven its effectiveness. If we fail to maintain competitiveness while introducing ambitious climate measures it will be hard to convince other countries to choose the same path."

Read more about our position on a CBAM in our position paper "What trade can do for climate" and our reply to the European Commission public consultation.