EU agreement on carbon pricing of imported goods, including hydrogen

On Tuesday (December 13) the European Parliament and Council reached an agreement on the Carbon Border Adjustment Mechanism (CBAM), which looks to put a fair price on carbon emitted during the production of imported goods, including hydrogen.

Under the agreement, the CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.

The CBAM is hoped to make sure that the price for embedded carbon emissions generated in the production of certain goods imported into the EU, ensuring that the carbon price of imports is equivalent to the carbon price of domestic production.

In a statement, the European Commission said, “Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports.”

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