Developments in the European Union’s Carbon Border Adjustment Mechanism Regulations and What they Mean for Vulnerable Third Countries
The European Parliament has been engaged in a lengthy legislative process for reviewing the European Union Emissions Trading System (ETS). The revision forms a key part of the Commission’s Fit for 55 climate legislation package, which aims to bring EU legislation in line with the 2030 goal of reducing net greenhouse gas emissions by at least 55%. On June 22nd 2022, the next step of the process was complete, as the European Parliament adopted positions on the ETS reforms and the design of a Carbon Border Adjustment Mechanism. The texts adopted by the EU Parliament, which contained several amendments to the initial EU Commission proposals, will determine Parliament’s position on negotiations with EU member countries. While the outcome is unknown, Parliament’s position sheds light on what shape the final EU ETS revisions and CBAM may take.
Both measures are expected to have significant spill-over effects on the EU’s trade partners. Many low and middle-income African countries are particularly vulnerable to these effects. Third countries should follow the legislative process closely and develop their understanding of existing risks to ensure they are prepared to adapt where necessary.
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