A Joint Statement issued on 8 April 2021 at the conclusion of the 30th BASIC Ministerial Meeting on Climate Change has expressed concern about the insufficiency and inadequacy of the support provided by developed countries; and is concerned that the proposed EU carbon border adjustment is discriminatory and unfair to developing countries. The BASIC group of countries consists of Brazil, South Africa, India and China.

The European Commission considers however that a carbon border adjustment is necessary to preserve competitiveness. As carbon pricing through the EU carbon emissions trading system makes goods produced in the EU relatively more expensive, EU businesses may become less competitive or may consider moving out of the EU unless a border adjustment is introduced.

The European Commission has therefore been considering a carbon border adjustment mechanism (CBAM). The Commission intends to issue draft regulations in June 2021, and the proposals will then need to be considered by the European Parliament and by member states.

When the draft proposals are released they are likely to impose a charge on goods at the border that will be generally equivalent to the additional carbon price the importers would have incurred if the goods had been covered by the EU emissions trading system. It is likely that the CBAM will not apply to goods from countries that already price carbon emissions.

The scope of the CBAM may initially be limited to a few sectors, such as power, cement, steel, aluminium or fertilizers, with gradual extension to other sectors over time.

The draft regulations to be issued in June 2021 are expected to cover the details of technical issues such as determining the amount of carbon embedded in the imported products and how credits would operate in relation to the adjustment.