EU to Implement First Carbon Border Tax on Steel and More Starting 2026

"End of Internal Combustion Engine Vehicle Sales by 2035"

[Asia Economy Reporter Yujin Cho] The European Union (EU) executive body, the European Commission, announced on the 14th (local time) that it will introduce the world's first 'carbon border tax' in response to climate change. However, there are considerable differences of opinion among the 27 member states and the European Parliament, and it is expected that it will take a significant amount of time to reach an agreement and fully implement the measure.

On this day, the EU Commission proposed a policy package that includes the introduction of the Carbon Border Adjustment Mechanism (CBAM), commonly known as the carbon border tax, to reduce net greenhouse gas emissions by 55% by 2030, and effectively banning the sale of new gasoline and diesel vehicles within the EU starting in 2035.

The CBAM, which imposes costs on imported products with higher carbon emissions than domestic products within the EU, will be gradually applied from 2026 to sectors including steel, cement, and aluminum. The policy stipulates that if products are exported from countries with higher carbon emissions than EU countries, tariffs will be imposed proportionally to the excess emissions.

In addition to the carbon border tax, the EU Commission proposed a plan to effectively ban the sale of new gasoline and diesel cars in the 27 EU member states.

The plan aims to reduce carbon emissions from new vehicles by 55% compared to 2021 levels by 2030, and to achieve a 100% reduction from 2035. Accordingly, the EU Commission stated that all new cars registered from 2035 will have zero carbon emissions.

The EU Commission also proposed reforming the EU Emissions Trading System (ETS) market to impose carbon emission costs on the transport and construction sectors and to include shipping in the ETS for the first time.

Previously, the Commission set a goal to make the EU the first 'carbon-neutral' continent by 2050 and proposed the 'European Green Deal,' a blueprint for climate change and environmental policies. Last month, the European Climate Law was adopted to give this goal legal binding force.

Carbon neutrality means offsetting carbon emissions that cause global warming through carbon reduction and absorption activities such as renewable energy generation, resulting in a net total emission of '0.'

Ursula von der Leyen, President of the EU Commission, said on the day, "The fossil fuel economy has reached its limits," adding, "Europe was the first continent to declare climate neutrality by 2050, and now it has become the first continent to present a concrete roadmap."

Before the EU Commission's announcement, the UK Guardian interviewed President von der Leyen, who said, "We understand the fear that this plan (to increase carbon emission costs in transport, manufacturing, and heating sectors) will trigger gasoline price hikes," reaffirming policies to support heating and transport fuel for low-income households.

The EU Commission's proposal requires approval from the 27 member states and the European Parliament, but the prevailing view is that reaching an agreement will not be easy. Some foreign media predict that negotiations could take more than two years due to disagreements between Northern European member states, where electric vehicle sales are surging, and Eastern European member states concerned about the costs of decarbonization.

Pascal Canfin, Chair of the European Parliament's Environment Committee, criticized the plan to include the transport and construction sectors in the Emissions Trading System (ETS), calling it "political suicide and a huge mistake."

This content was produced with the assistance of AI translation services.