Analysis-Industry fears EU carbon border tax will penalize British green energy

Analysis-Industry fears EU carbon border tax will penalize British green energy

Sub: IR

Sec: Int Grouping

Context:

• British wind and solar farms exporting power to continental Europe could face CO2 fees from 2026 – even though they don’t produce any emissions – unless the UK and European Union can agree changes around the EU’s carbon border tax.

More on news:

• The charges, set out in a little-noticed clause of the CO2 levy law, could hit revenues of renewable energy projects in the UK.
• The extra cost of the charge could make it uneconomic to export excess clean power from Britain to Europe at certain times when demand is weaker, renewables generation is high, and power prices are low.

What is EU Carbon Border Tax:

• The EU’s Carbon Border Adjustment Mechanism (CBAM) is the EU’s tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.
• The carbon border tax is a levy proposed by the European Union to protect its domestic industry from cheaper imports from countries where rules imposing low carbon production are not strict.
• The EU fears that while its industry would be at a disadvantage because European companies would have to comply with strict rules, those from other countries may not.