Europe advanced to the first round

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Discussed in recent years, the mechanism of cross-border carbon regulation (TCR) for the import of “dirty” products into the EU countries is ready to be launched. The European Commission approved the rules for the transitional period of the TOUR, which starts on October 1. The main thing is that until the end of 2025, you will not have to pay a carbon tax when exporting cement, iron, steel, fertilizers, aluminum, hydrogen and electricity to the EU. Suppliers of these products will only be required to provide reporting. It is expected that the data collected in this way for more than two years will help to finalize the system and move on to the main stage of the program, when you will have to pay extra for the right to supply Europe with “dirty” products in terms of emissions.

The European Commission approved the rules for applying the mechanism of transboundary carbon regulation at the transitional stage of its implementation. It starts on October 1 this year and will last until the end of 2025.

Recallthat we are talking about imposing a carbon tax on the import of “dirty” goods into the EU (the production of which emits significant amounts of greenhouse gases into the atmosphere – for example, cement, fertilizers, aluminum). To supply such products to Europe, exporters will need to buy special certificates, in fact, pay a new “duty” for imports. The price of certificates is calculated based on the average price per tonne of CO2 equivalent in the European carbon market (EU ETS, for more details, see “Kommersant” dated April 26). If the manufacturer can prove that he has paid for production emissions in his jurisdiction, then the amount paid is fully deducted from the “invoice” issued to him.

In general, the TOUR is part of the European climate program Fit for 55 in 2030, which aims to reduce CO2 emissions by 55% by 2030 compared to 1990 levels. The border carbon tax should stimulate the use of “clean” technologies in countries that import products to the EU (including the Russian Federation), and prevent the so-called carbon leakage, that is, the transfer of “carbon-intensive” industries outside the EU.

In the future, the mechanism should equalize the carbon costs for goods produced in the EU and for goods imported into it, that is, to deprive producers who save on the use of “clean” technologies.

The European Commission has been working on the introduction of a border carbon tax since 2021 (see “b” from 15 And July 20, 2021). The past two years have been spent agreeing on the parameters and discussing the details in the EU Council and the European Parliament. So far, consensus has been reached only on the rules of the transitional period. The parties agreed that in the preparatory phase, the TRP will only apply to EU imports of cement, iron and steel, fertilizers, aluminium, hydrogen and electricity.

As follows from the regulation published by the European Commission, until 2026 it is not necessary to pay a carbon tax, importers and suppliers will only be required to report on emissions. Moreover, in the first year of the program, it will be possible to provide it both according to the EU methodology (described in detail in published documents), and according to equivalent national methodologies of third countries, and then only according to the European system.

It is assumed that the provided two and a half years will be enough to establish a mechanism for interaction between importers and suppliers in terms of collecting reports in a pilot mode, finalize the system of restrictions that will be in effect at the main stage of the program, and expand the list of products subject to cross-border taxation. Even before the end of the transition period, the European Commission is going to publish at least one document with interim conclusions.

It should be noted that the transitional period does not cause concern among the trade partners of the European Union, but the further full-fledged work of the program may seriously complicate their access to the European market.

The debate about the legality of launching restrictive climate initiatives has not subsided for several years. Complain about the carbon tax, in particular, WTO member countries trading in the EU (more see “Kommersant” dated June 14).

As for Russia, after the tightening of sanctions in 2022 and the reduction of its exports to the EU, it was assumed that the entry into force of the TUR would have a limited impact on the Russian economy (see Kommersant dated April 26, 2022). But the latest reviews by both Russian and foreign analysts suggest that, although the reduction in turnover will indeed lead to lower tax costs, there is no reason for much optimism: other trading partners of Russia (in particular, China) are planning to introduce similar regulation in the foreseeable future. Countries outside the EU can take care of the “purity” of Russian products even before introducing their own tax: it is assumed that they will take into account European standards when exporting to the EU their goods produced using Russian intermediate products (see “Kommersant” dated July 13).

Christina Borovikova

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