Policy Overview

The Carbon Border Adjustment Mechanism (CBAM), proposed by the EU Commission in April 2020, is a border tax designed to ensure that the price of imported products reflects carbon prices in Europe. It would therefore serve as a tool to incentivize increased climate ambition outside the EU, while protecting European industry from carbon leakage. The EU Commission’s inception impact assessment report stated that the CBAM would operate alongside the EU Emissions Trading System (EU ETS) as an alternative to the allocation of free emission permits, covering the cement, iron and steel, aluminium, fertilizers and electricity sectors. A public consultation was launched to gather stakeholder views in March 2020.

Policy At Risk

After intense negative lobbying from heavy industry sectors, the EU Commission’s CBAM proposal did not incorporate an ambitious phase out of the free allocation of emissions allowances in the EU ETS alongside the CBAM implementation, and did not include indirect emissions. The EU Parliament proposed to include indirect emissions, and the Parliament and Council gradual phase out of the free allocation of emissions allowances in the EU Emissions Trading System (EU ETS).

InfluenceMap Query

Carbon Tax

Policy Status

Under consideration: proceeding to trilogues after votes in EU Parliament and Council.

  • European Parliament: Environment (ENVI) Committee
  • Rapporteur: Mohammed Chahim (Socialists and Democrats)
  • European Council: Environment Council

Evidence Profile

503971251595

European Commission

European Parliament

European Council

Lobbying Overview

Overview of Corporate and Industry Lobbying

The aggregated evidence of corporate and industry lobbying on the CBAM shows intense, negative engagement from energy intensive ETS sectors (cement, steel, etc.), while undergoing mixed lobbying from the utilities sector.

Long-term Lobbying Trends

The heavy industry sector lobbied for the continuation of the free allocation of emissions allowances in the EU ETS alongside the implementation of the CBAM. Actors including Eurofer, Cefic and CEMBUREAU advocated that a CBAM alone will not protect industry from carbon leakage and therefore would threaten competitiveness due to cheaper imports from countries with weaker climate policy or ambition.

German industry appears particularly opposed to the CBAM, as several German industry associations, the German Chemical Industry Association (VCI) and the Federation of German Industries (BDI), strongly opposed the CBAM throughout 2021-22, as they argue that it is an untested mechanism, and favor the continuation of carbon leakage protection measures in the EU ETS.

Heavy industry positions diverge on the inclusion of indirect emissions in the CBAM, as associations CEMBUREAU and Eurofer supported the inclusion of indirect emissions, but actors in the aluminium sector, Eurometaux and Norsk Hydro lobbied against this, suggesting that it would be too complex.

Progressive actors from the utilities sector and climate positive associations supported the removal of free allowances alongside the implementation of a CBAM, the Corporate Leaders Group supporting a sped up phase out of free allowances and the inclusion of indirect emissions throughout 2021. The utilities sector, including actors such as Enel, has advocated for hydrogen to be included in the CBAM.

Lobbying on the proposal since EU Commission adoption in July 2021

Heavy industry actors advocated against the proposal’s phase out of free allocation in the EU ETS from 2026, supporting full benchmark based free allocation of emissions allowances until at least 2030 or only after the CBAM has been proven fully effective. The steel industry has been particularly active in lobbying against the EU Commission’s proposal in 2021-22, entities including Eurofer, ArcelorMittal, thyssenkrupp and SSAB, signing open letters to the EU Parliament and Member States in May and June 2022 before key votes on the file, advocating for policymakers to oppose ambitious proposals for a CBAM.

The utilities and energy sectors, as well as heavy industry, have advocated for export rebates, essentially subsidizing exports, to be included in the CBAM, suggesting that exporters will not be able to compete on foreign markets. Snam suggested that this would “create a true level playing field” for companies with producers outside Europe. Cross-sector associations including the BDI and BusinessEurope stated that export rebates are crucial to the global competitiveness of European companies in third markets, and advocating for maintaining “full free allocation” of emissions allowances for production destined for export.

Lobbying Impacts on Policy Ambition

By considering the potential scenarios in the EU Commission's original Impact Assessment Report for the CBAM and comparing this to the final proposal, a gauge of the impact of industry lobbying can be taken. In this case, intense engagement from heavy industry appears to correlate to the adoption of several weaker positions by the EU Commission and Council.

EU Commission Proposal

  • Carbon border tax: The EU Commission proposed implementing the CBAM from 2026, requiring importers to buy certificates corresponding to the carbon price that would have been paid had the goods been produced in the EU, unless the producer can show it has already paid a carbon price in the country of production.

  • Phase out of free allocation of emissions allowances: The EU Commission’s Director General for Climate Action stated in March 2021 that the Commission does "not see that the two instruments are compatible at the same time", and that free CO2 credits remove incentives for industry to invest in low-carbon production. However, the existing carbon leakage protection for these sectors - the free allocation of emissions allowances in the EU ETS - is proposed to reduce by 10% each year from 2026 to be eliminated completely by 2035. This phase out of free allowances was outlined in the EU Commission’s EU ETS proposal, but is directly linked to the CBAM proposal.

  • Indirect emissions: The proposal only covers direct emissions released during the production process, not indirect emissions such as those associated with the production of the electricity consumed, but aims to review the inclusion of indirect emissions in the future.

EU Parliament Proposal

The Environment Committee proposal on the CBAM, voted on in May 2022, significantly increased the ambition of the policy relative to the EU Commission’s proposal. The EU Parliament adopted its proposal for the CBAM on the 22nd June after it was rejected by MEPs on the 9 June in the plenary, and was significantly weakened compared to the EU Parliament Environment Committee proposal.

  • Phase in of CBAM and phase out of free allowances: The EU Parliament proposal phased in the CBAM from 2027, but free emissions allowances are proposed to phase out from 2027-2032, a marginal improvement on the EU Commission’s proposal, but weaker than the EU Parliament Environment Committee proposal. CBAM products exported to countries without emissions trading systems would receive 100% free allocation.

  • Indirect emissions: The proposed CBAM included indirect emissions as well as direct emissions.

  • CBAM revenues: The proposal mandated that revenues from the CBAM should be used from the EU budget to support the green transition in developing countries.

EU Council Proposal

The EU Council adopted a proposal for the CBAM which mostly preserved the ambition of the EU Commission’s proposal, but weakened the phase out of the free allocation of emissions allowances.

  • Phase in of CBAM and phase out of free allowances: The EU Council preserved the EU Commission’s phase in date of 2026 and the timeline to phase out the free allocation of emissions allowances between 2026-35. However, it slowed down the phase out of emissions allowances before 2030.

The EU Council, Commission and Parliament will now enter into negotiations to finalize the legislation in trilogues, with the EU Parliament taking the most ambitious position on the file.

InfluenceMap Query

Carbon Tax

Policy Status

Under consideration: proceeding to trilogues after votes in EU Parliament and Council.

  • European Parliament: Environment (ENVI) Committee
  • Rapporteur: Mohammed Chahim (Socialists and Democrats)
  • European Council: Environment Council

Evidence Profile

503971251595

European Commission

European Parliament

European Council

Live Lobbying Alerts

VCI opposes the EU's carbon border adjustment mechanism

06 July 2022

In a report published on 28th June, Verband der Chemischen Industrie (VCI) emphasized its opposition to the Carbon Border Adjustment Mechanism (CBAM), advocating for climate clubs instead. Additionally, a Euractiv article from 22nd June reported on VCI opposing the EU Parliament's CBAM compromise, calling it a “legally uncertain bureaucratic monster prone to abuse.”

EU industry associations unsupportive of EU ETS reform and mixed on CBAM

30 June 2022

In press releases published on 22nd June, Eurofer, Eurometaux and CEMBUREAU stated positions on the EU Parliament’s proposals for a Carbon Border Adjustment Mechanism (CBAM) and reform of the EU Emissions Trading System (EU ETS). Eurometaux advocated against the inclusion of indirect emissions in the CBAM, whilst CEMBUREAU supported it. However, CEMBUREAU, Eurometaux and Eurofer all advocated for a slower phase out of the free allocation of emissions allowances in the EU ETS. Eurofer also did not support proposals to strengthen the Market Stability Reserve and to rebase the emissions cap.

Eurofer and steel companies unsupportive of EU ETS and CBAM reform

09 June 2022

An open letter to the European Parliament and Member States facilitated by Eurofer and signed by European CEOs of EU steel companies stressed concerns regarding the recent vote in the EU Parliament Environment Committee to increase the ambition of the EU Emissions Trading System and the Carbon Border Adjustment Mechanism. They were unsupportive of "scaling back existing carbon leakage protection" and advocated for EU policymakers to "prevent a sharp decrease in free allocation." This was signed by regional and/or division CEOs of thyssenkrupp, ArcelorMittal, SSAB, Tata Steel and other companies in the steel value chain.

CEOE advocates for continued carbon leakage protection alongside CBAM

27 May 2022

In a position statement outlining priorities for the Spanish Presidency of the EU Council, published on 22nd May, the Confederación Española de Organizaciones Empresariales (CEOE) advocated for the EU Carbon Border Adjustment Mechanism (CBAM) to complement the free allocation of emissions allowances in the EU Emissions Trading System (EU ETS), and was in favor of an ‘adequate’ levels of free allowances.

Cemex unsupportive of EU ETS reforms

18 May 2022

The news outlet Echodonia reported on 13th May that Cemex did not support reforms to the EU Emissions Trading System (EU ETS), stressing the costs from high carbon prices. It also advocated for a gradual reduction of the free allocation of emissions allowances in the EU ETS alongside the implementation of a Carbon Border Adjustment Mechanism (CBAM).

ArcelorMittal Europe CEO unsupportive of EU ETS reform and CBAM

18 May 2022

Speaking at a conference on 12th May, ArcelorMittal Europe’s CEO and President of Eurofer, Geet Van Poelvoorde, did not support proposed reforms to the EU Emissions Trading System (EU ETS), stressing high costs and advocating for a transition phase. Van Poelvoorde also did not support the EU Commission’s proposed Carbon Border Adjustment Mechanism (CBAM), advocating to maintain the free allocation of emissions allowances until 2030. However, he supported a regulatory framework for green hydrogen.

Eurofer supports the EU ETS and CBAM reform with exceptions

06 July 2022

In a press release, published on 1st July 2022, Eurofer’s Director General Axel Eggert supported the EU Council’s proposal for the Carbon Border Adjustment Mechanism and the reform of the EU Emissions Trading System (EU ETS), but suggested that the proposal needed strengthened carbon leakage protection measures and export rebates. He also stated that reforms such as rebasing the emissions cap and strengthening the Market Stability Cap should be avoided.

Eurofer opposes EU Emissions Trading System reforms

17 June 2022

An op-ed written by the President of the EU Parliament Environment Committee, Pascal Canfin, published in Le Monde on the 2nd June reported that in a “tsunami of lobbying” Eurofer had advocated to EU parliamentarians to not support the EU Commission’s proposal to reform the EU Emissions Trading System (EU ETS) by eliminating a certain amount of carbon credits from the market, called ‘rebasing’. Canfin stated that the EU Commission had shown that without this measure, there is no chance of achieving the necessary emissions reductions in European industry to align with the UN Paris Agreement. Eurofer also appeared to advocate for the EU Parliament to support the weaker draft of the EU ETS and the Carbon Border Adjustment Mechanism (CBAM).

Eurofer states opposition to ambitious EU ETS reform

27 May 2022

In a position paper published on 19th May, Eurofer advocated for the continuation of current carbon leakage protection measures under the EU Emissions Trading System (EU ETS) until at least 2030, alongside the EU's Carbon Border Adjustment Mechanism (CBAM). The association also did not support proposed reforms to the EU ETS, such as strengthening the Market Stability Reserve and rebasing the emissions cap. The Director General Axel Eggert came out against the EU Parliament Environment Committee’s vote to increase the ambition of the EU ETS and the CBAM, opposing the new phaseout date of 2030.

BusinessEurope opposes increased ambition to the ETS and CBAM

25 May 2022

In a press release on 18th May, BusinessEurope Director, General Markus J. Beyrer, stated opposition to the EU Parliament Environment Committee’s vote to increase the ambition of the EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism by speeding up the phase out of the free allocation of emissions allowances in the EU ETS. He also did not support the proposal to make free allowances conditional on decarbonization efforts.

VCI opposes EU ETS reform and inclusion of chemicals in CBAM

18 May 2022

In a press release on 16th May, the German Chemical Industry Association (VCI) did not support reforms to the EU Emissions Trading System (EU ETS) such as the reduction of the free allocation of emissions allowances and an increase in the emissions reduction target for ETS sectors for 2030. In the same press release, VCI opposed the inclusion of the chemical industry in the EU Carbon Border Adjustment Mechanism (CBAM). In a public hearing by the German Committee for Climate Protection and Energy on 11th May, VCI did not support the CBAM, suggesting that it is protectionist and supporting the inclusion of export rebates.

European Round Table for Industry calls for greater carbon leakage protection

18 May 2022

In a 12th May statement, the European Round Table for Industry (ERT) advocated for a review of the EU Emissions Trading System and Carbon Border Adjustment Mechanism in relation to the heightened risk of carbon leakage, implying that greater carbon leakage protection may be needed which would weaken the ambition of the policies.

Entities Engaged on Policy

The table below lists the entities found to be most engaged with the policy. InfluenceMap tracks over 350 companies and 150 industry associations globally. Each entity name links to its full InfluenceMap profile, where the evidence of its engagement can be found.

Influencemap Performance BandOrganizationEngagement Intensity
C-Shell63EnergyEurope
CBP60EnergyEurope
CVolkswagen Group54AutomobilesEurope
C-TotalEnergies52EnergyEurope
C-Eni38EnergyEurope
D-BusinessEurope53All SectorsEurope
C-European Chemical Industry Council (Cefic)58ChemicalsEurope
CEuropean Round Table for Industry (ERT)20All SectorsEurope
D+European Automobile Manufacturers Association (ACEA)40AutomobilesEurope
D-International Federation of Industrial Energy Consumers (IFIEC)35All SectorsEurope