Excluding indirect emissions from CBAM? That doesn’t add up

Indirect CO₂ emissions from the electricity used in the production of imported goods should be accounted for.

This is just one of the recommendations published by Eurelectric on the Carbon Border Adjustment Mechanism (CBAM) proposal – part of the Commission’s ‘Fit for 55’ package aimed at reducing EU greenhouse gas emissions by 55% compared to 1990 levels.

The CBAM is a climate measure which would impose levies on certain carbon-intensive imports into the EU, seeking to prevent the risk of carbon leakage and to support the EU’s increased ambition on climate mitigation.

In our  amendment proposals, Eurelectric points out that because the CBAM currently only applies to direct CO₂ emissions, a potentially significant share of emissions embedded in goods imports will not be subject to a CBAM charge.

This would risk the environmental integrity of ‘Fit for 55’ and could lead to competitive distortions between EU producers and third countries, as it puts less pressure on these countries to decarbonise their power sector.

In addition, basing alternative default values on fossil fuel electricity on the EU mix might underestimate the actual worst performers in third countries.

Instead, we propose to base specific default values on the 10% worst performing installations of the exporting country or sub-region. If those specific default values cannot be determined, the world’s worst polluting power plants could serve as a basis.

Eurelectric believes that electricity exports that perform better than the 10% worst performers will have a financial incentive to provide actual data to the Commission, as this would lower the CBAM charge incurred. Electricity exporters should therefore be allowed to prove that they are better than the default value.

Finally, hydrogen imports should also be covered by the CBAM, in view of the recent increased ambitions. For instance, in its recent REPowerEU Communication, the European Commission, explores the possibility of adding 10 million tonnes of imported hydrogen from diverse sources annually by 2030.   

In terms of imported hydrogen and its derivatives, such as ammonia, Eurelectric suggests that the EU should ensure that these products are as decarbonised as possible.

According to the EC proposal, the Carbon Border Adjustment Mechanism (CBAM) comes fully into force in January 2026.