Europe's Carbon Border Tax: Major Exemptions Proposed

The European Commission is set to propose exemptions for the majority of companies covered by the EU's carbon border levy. The draft suggests only firms importing over 50 metric tons yearly would face the levy, simplifying the scheme and easing the burden on small businesses.

The European Commission is poised to introduce exemptions for most companies falling under the EU's carbon border tax, citing their minimal 1% emissions contribution within the scheme. This proposal aims to slash the number of businesses subject to the levy, cutting red tape drastically for over 200,000 importers.

A draft proposal reviewed by Reuters suggests the carbon border adjustment mechanism (CBAM) would target only those importing goods with a mass-based threshold of 50 metric tons yearly. This adjustment better aligns with the scheme's climate objectives by focusing on greater emissions contributors.

The revisions are intended to streamline compliance for smaller companies, with the CBAM continuing to cover 99% of emissions. Changes would take effect in 2026, requiring European Parliament and member country approval, while allowing simplified CO2 pricing calculations from 2027.

(With inputs from agencies.)