The European Union’s carbon border tax came into force on January 1, a landmark climate policy that has drawn criticism from trading partners while reaffirming the bloc’s green ambitions.
The Carbon Border Adjustment Mechanism forces companies exporting aluminum, cement, steel, and other pollution-heavy goods into the EU to pay for their products’ emissions. The EU argues it levels the playing field against countries with more lax climate rules while advancing its environmental agenda.
The policy, however, has been especially ill-received by major trading partners, particularly China and India, which regard it as protectionism cloaked in environmental rhetoric. Still, the tax signals the bloc’s commitment to its green agenda, which recently suffered a setback when plans to accelerate EV adoption were rolled back. The new policy also incentivizes countries to adopt their own carbon pricing systems, since exports are eligible for a deduction if they’re already subject to carbon pricing in their country of origin.