EU Carbon Levy and Its Impact on U.S. Energy Trade
The European Union is set to launch a carbon levy in January, which will be the first large-scale border tax on carbon-intensive goods worldwide.
The EU hopes the tax will reduce greenhouse gas (GHG) emissions from heavy industries by encouraging companies to clean up their operations.
Carbon Border Adjustment Mechanism (CBAM)
From January 1, 2026, the EU will introduce the CBAM to place a tariff on products such as steel, fertilizers, cement, aluminum, and hydrogen imported from outside the 27-state bloc.
- Steel
- Fertilizers
- Cement
- Aluminum
- Hydrogen
Any company importing products from outside of the EU will need to buy CBAM certificates to cover the GHG emissions associated with the goods, most likely at the same price as the EU Emissions Trading System (ETS) market price.
The EU carbon levy could impact U.S. energy trade, global emissions, and cross-border industry competitiveness.
Author's summary: EU carbon levy may hinder US energy trade.
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