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The European Parliament’s environmental committee recently voted in favour of a resolution supporting European Union carbon border adjustments. The resolution, which is expected to receive a full parliamentary vote in March, will not be binding, but will demonstrate political support for a carbon border adjustments law the EU’s executive branch, the European Commission, is currently drafting. The Commission’s law is slated for proposal to the European Parliament in June.  

If implemented, EU carbon border adjustments would place a duty on imports from jurisdictions lacking a sufficient price on carbon emissions. This would protect European industries subject to the bloc’s carbon pricing system from competition with producers in countries with weaker environmental laws, as well as ‘leakage’, wherein businesses relocate operations to environmentally lax jurisdictions to increase cost competitiveness (i.e., ‘offshoring pollution’).

Already aiming to reduce emissions 40% below 1990 levels by 2030, the EU is reportedly planning to strengthen that target to 55%. Accordingly, carbon border adjustments are seen economically as a “matter of survival” by some in the EU, as the bloc’s world-leading climate ambitions necessarily result in higher operating costs for certain businesses operating in energy-intensive industries. 

In addition to the EU, Canada also recently announced that, as part of its A Healthy Environment and a Healthy Economy plan, it is exploring and discussing carbon border adjustments with international trading partners.