European Parliament clears carbon tax simplification, paving way for exemption for 90 pct of companies

Brussels – The European Parliament approved the amendment of the border carbon adjustment mechanism (CBAM) – the so-called carbon tax – proposed by the European Commission on February 26 in the ‘Omnibus I’ simplification package. Member states should give the green light at the next General Affairs Council on May 27. At that point, 90 percent of companies will have the road cleared toward exemption from the European carbon tax.

The Parliamentary approval of the changes to the regulation was almost a plebiscite: 564 votes in favor, 20 against, and 12 abstentions. In the opinion adopted by MEPs, support remains for introducing a new de minimis mass threshold of 50 tons below which companies- except those in the electricity and hydrogen sectors- may be exempted from purchasing carbon certificates. The change would exempt about 182,000 importers, mainly small and medium-sized companies and private individuals, who import small quantities of products subject to the CBAM.

“This approach allows us to simplify procedures for companies without dismantling or weakening the mechanism,” said PD MEP Antonio Decaro, chairman of the Environment Commission and rapporteur of the text amending the regulation for the Parliament. Brussels estimates that the environmental objective of the mechanism would remain unchanged, as the rules would cover 99 percent of total CO2 emissions, mainly related to imports of iron, steel, aluminium, cement, and fertilizers.

Decaro applauded the European Parliament’s decision “not to reopen other provisions of the legislation” because the CBAM “is a fundamental tool to avoid carbon leakage and incentivize climate action outside the EU.” The co-chairman of the European Conservatives and Reformists group, Nicola Procaccini, took a different view, commenting on the sidelines of the vote: “We would have liked to have further improved the CBAM regulation with our amendments, but the changes approved today by the European Parliament go in the desired direction.” Among the Italian party delegations in Brussels, only the League did not support the text, choosing to abstain.