JUST TRANSITION, EVERYONE AGAINST CBAM
Thursday’s negotiations on Just Transition focused largely on border adjustment policies for emissions, which in the jargon used by the G77 countries appear as “unilateral measures that restrict trade”. In the room, developing countries continued to express concern about the entry into force of these policies, which include the European Union and the United Kingdom’s Carbon Border Adjustment Mechanism (CBAM). On the other hand, developed countries defend themselves by pointing to the voluntary nature of any national policy and the need for these measures to achieve their long-term climate goals, while avoiding relocation and changes in partnership choices, the carbon leakage. But what are the reasons behind the different positions?
Developing countries have been trying to open a concrete discussion on the subject for a long time. For the first time in Bonn, during the interim negotiations last June, we saw the issue included on the agenda in the form of a footnote inviting discussion in related strands, including the Just Transition Work Programme. At COP30, developing countries returned more determined than ever and succeeded in getting the Presidency to include this issue in the consultations it is currently conducting.
In addition to this, CBAM remains one of the hot topics in the Just Transition debate.
The European CBAM, which will come into force in 2026, provides for the imposition of a carbon tax equal to that applied to domestic production. Importers will have to declare the CO2 emissions generated during the production of goods and purchase corresponding certificates, the value of which will be defined on the basis of the Emission Trading Scheme. This mechanism is expected to have an impact on the price of imported goods, with effects directly proportional to the carbon intensity of the products – factors which, according to the EU, will make competition fairer for local industries. The mechanism will initially apply to the most carbon-intensive goods and those at greatest risk of carbon leakage (cement, iron and steel, aluminium, fertiliser, electricity and hydrogen), but may subsequently be extended to other products. The UK will also introduce its own specific mechanism from 2027, initially imposing a carbon tax on aluminium, cement, fertilisers, hydrogen, iron and steel.
The debate we witnessed in the chamber on Thursday was particularly heated. Developing countries believe that the measure does not respect the principle of Common but Differentiated Responsibilities and Respective Capabilities, defined in Article 2.2 of the Paris Agreement, according to which responsibility for climate change is shared but differentiated, as are the Parties’ capabilities to address it.
The CBAM was not designed to take this principle into account, as it imposes a carbon tax on imported products regardless of the nature of the countries of origin. The tax, which is directly proportional to the emissions produced during the production phase, disadvantages less developed countries, which on average have access to particularly old and high-impact technologies. Furthermore, the proceeds from the measure will be used to finance the transition within the EU, rather than to help other countries in their development, and financial flows would thus move from developing countries to developed countries, in contradiction with their financial obligations under the Paris Agreement. The impact this could have on trade will push countries to adopt policies for the decarbonisation of specific sectors, potentially reducing the resources available to them for sustainable development and poverty eradication, as well as their freedom to determine their own national policies – this is at least the main political point raised by the main opponents, who in many cases have now equipped themselves by setting up their own carbon taxation systems, thus aiming to keep within their national territory the taxes that would otherwise go to the coffers of their European partners.
From the perspective of the European Union and the UK, the CBAM is a national measure and an integral part of ambitious decarbonisation targets, which require the adoption of measures to shape their economies and promote research and innovation. The mechanism is the result of a transparent process, which in the case of the EU also included impact assessments and has undergone a transition phase since 2023. Furthermore, the Paris Agreement was not designed to analyse specific measures, but rather to ensure national determination and a bottom-up process. However, there is a commitment to keep the dialogue open on how to amplify the benefits and reduce the cross-border impacts of such climate measures. One thing is certain: we will be hearing more about this. The COP30 negotiations resumed from the last informal note produced in Bonn, which presents two specific placeholders (blank spaces in the text for future decisions) on the issue, along with the option of not including any text: the first on the cross-border impacts of these measures, the second on promoting international cooperation and concerns about unilateral policies. These issues will need to be resolved in order to reach a final text.
Article by Claudia Concaro, Italian Climate Network delegate at COP30 in Belém.
Cover image: photo by Claudia Concaro.