European Union launches the first phase of CO2 tarriff system

On October 1, 2023, the European Union launched the first phase of the world’s first system to impose CO2 emissions tariffs on imported steel, cement, and other goods as it tries to stop more polluting foreign products from undermining its green transition. Under the new mechanism, EU importers will have to report the greenhouse gas emissions embedded during the production of imported volumes of iron and steel, aluminum, cement, electricity, fertilizers, and hydrogen. It is expected that the EU will roll out further product categories in the future in an effort to drive national and global climate action. The measure is also intended to disincentivize European manufacturers relocating to countries with lower environmental standards.

The Government of Canada has had a preliminary consultation on carbon border adjustments and if they are to proceed further to explore such a measure, this could have major ramifications on supply chains, and retailers who serve as first importers. RCC will continue to keep a close eye on any developments.