EU levels playing field as Chinese, Asian exporters are required to provide emissions data ahead of carbon tax

Manufacturers in China and elsewhere in Asia will have to furnish carbon emissions data to EU customers from next year ahead of the launch of the world’s first carbon tariff, according to a European Parliament member.

Regulations to level the playing field for imports and domestic products in terms of greenhouse gas emissions kick in next year, when disclosure of emissions of imported goods will be required. From 2026, a carbon tax will be charged in the EU based on the goods’ emissions.

The Carbon Border Adjustment Mechanism (CBAM) will be applied initially to at least five industries – cement, aluminium, fertilisers, steel and electricity – and is subject to further negotiations among EU member nations.

“These sectors are important because they involve some of the highest risks of carbon leakage – relocation of production incentivised by the difference in carbon prices between the EU and other countries,” said Pascal Canfin, who chairs the European Parliament committee on environment, public health and food safety, ahead of a supply chain conference organised by the French Chamber of Commerce in Hong Kong on Thursday.

The CBAM aims to prevent the offsetting of the EU’s greenhouse gas emission reduction efforts through imports from non-EU nations with laxer climate mitigation policies. It seeks to achieve this by removing incentives for companies to relocate manufacturing to these nations, and induce them to invest in decarbonisation facilities at plants in the EU.