Today, a company can relocate its industrial production to a country with laxer environmental legislation than that of the European Union and achieve more benefits because the costs in that territory will be lower.
From October this dysfunction will disappear with a kind of tariff that Europe will impose on imports of products that have been manufactured without complying with the regulations imposed by the EU. It will be the Carbon Border Adjustment Mechanism (CBAM, for its acronym in English). CO2 is a colourless, odorless gas composed of oxygen and carbon, which is mainly responsible for global warming.
The expected collection is 0.1% of the GDP of the 27 countries of the Union, which is equivalent to around 14,500 million euros per year. These are calculations by Michael Keen, of the University of Tokyo, in a study published by the Barcelona Institute of Economics (IEB), a think tank of the University of Barcelona (UB). José MarÃa Duran-Cabré, director of the IEB-UB, reflects that the mechanism “supposes equalizing the conditions between European companies and the rest, because it establishes a tax on imported products equivalent to the domestic tax burden”.
But this strategy is not without some collateral damage. In general terms, if the advantage of offshoring countries outside the EU disappears, developing countries lose investments. On the other hand, in Europe the report places as the main negative consequence the “regressive impact” that this tax has on households with fewer resources. The Northwestern University professor, Diego Känzig, highlights that “a key transmission channel of carbon pricing policies is that they cause an increase in energy prices”.
After this first direct effect of reducing disposable income, an indirect one occurs, the academic explains in the report: “To the extent that higher energy prices have an impact on energy prices other products, the cost of living goes up in every way.” And all this affects “more disproportionately the poorest households”.
Where the impact will also be felt is in companies. Joan Tristany, general director of the business association Amec, details that “once the Mechanism is fully operational in 2026, the importers of the Union of these products will have to obtain the authorization of an authority of the Mechanism and acquire carbon certificates corresponding to the carbon price that would have been paid to produce the goods in the Union”. Although the system that will be followed is still to be defined, sources from the Tax Agency state that they will not collect the tax in Spain. One possibility is that whoever is in charge of managing the certificates or rights is the Ministry of Ecological Transition. On the other hand, Ministry sources claim that it is not yet clear what the mechanism will be like.
Raquel Pous, from Amec’s advisory service, explains that although the mechanism will be launched in October, there will be an adaptation period until January 2026. The association assures that first they will begin to tax five ranges of products: cement, electricity, fertilizers, iron and steel, and aluminum. The Council of Europe has already announced that the tax will also be applied to plastics or chemicals. A priori, importing companies will buy certificates in accordance with their expectations for the whole year. Certificates not used at the end of the year can be bought back, but only 30%, explains Pous.
In the IEB report, Aarhus University professor Mikael Skou Andersen wonders if now is the best time, with the energy crisis, to launch a new tax. In his opinion, the increase in energy prices in Europe is mainly due to the way in which the internal energy market is regulated. Today, prices are set according to the marginal price system, in addition to adding the price of emission rights. The teacher proposes to separate the sources of energy.
