The idea is to protect European industries, which are facing higher carbon prices than foreign competitors in countries like China.
Steel, cement and fertilisers should be among the first sectors covered by the upcoming carbon border levy aimed at safeguarding European businesses from cheaper CO2 intensive imports, according to the Polish government.
“Poland argues in favor of the implementation of a carbon border adjustment mechanism pilot phase, which would include at least the three following sectors at the beginning: steel, cement and fertilizers,” said Adam Guibourgé-Czetwertyński, undersecretary of state in the Polish Ministry of Climate and Environment.
The European Commission, which announced the border levy as part of its European Green Deal programme of environmental measures, said the goal of the proposal will be to avoid the risk of “carbon leakage” whereby companies relocate manufacturing abroad to countries where pollution costs are lower.
Although there is little evidence of carbon leakage to date, the risk is real and will only increase as the European Union adopts tougher climate goals for 2030, the EU executive said.
As soon as possible after the first phase, Hurtado Roa confirmed that the levy would expand to other sectors at risk of carbon leakage – companies moving out of Europe, where it is cheaper to emit greenhouse gases. The European Commission currently has a list of around 64 sectors at risk.
Also during the second stage, the Commission will look at introducing the levy to basic materials and what impact this would have, he added.
The carbon border adjustment mechanism will come into force in parallel with the phase-out of free allowances in the EU’s emission trading scheme (ETS), the EU’s carbon market.
Last month, the European Parliament seemed to back Poland’s view by rejecting proposals to scrap free ETS allowances once the planned carbon border adjustment mechanism is in place.