EU Tightens Conditions for Carbon Fee Deferral to Boost Low-Carbon Investment Confidence

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June 13, 2026, 11:41:29

EU flag. (Image from Unsplash)

(CNA, Brussels, June 12) — EU member states today agreed to tighten the conditions for temporarily suspending carbon fees on imported goods, a move expected to enhance policy stability and boost investor confidence in low-carbon investments in the European Union.

According to Reuters, despite opposition from countries including Slovakia, Romania, and Lithuania, a majority of EU member states approved the proposal.

The EU's Carbon Border Adjustment Mechanism (CBAM) imposes fees based on the carbon emissions embedded in imported goods, covering high-emission products such as fertilizers, steel, and cement. The policy aims to protect European domestic industries from undercutting by cheaper foreign goods with higher carbon footprints.

The European Commission initially proposed that certain products could be exempted from carbon fees in the event of "severe and unforeseeable circumstances," but the lack of a clear definition for this term raised concerns about ambiguity and unpredictability.

As a result, several EU member states and businesses opposed the Commission's proposal, arguing that it would create uncertainty for low-carbon investments. European low-carbon investments are only competitive if high-emission imported goods are required to pay the carbon border fee.

A ministerial-level agreement draft obtained by Reuters shows that the European Commission can only propose a suspension of carbon fees under specific conditions. One such condition is if the price of a product rises more than 50% compared to its 10-year average price within a six-month period.

EU member states and the European Parliament will now enter negotiations on the final rules. Some members of the European Parliament plan to further narrow the scope of the suspension clause, with some even advocating for its complete removal.

Following increased costs due to the Iran conflict, France initially called for a suspension of the EU carbon border tax on fertilizers to ease the burden on farmers.

However, after securing certain safeguards, France today supported the proposal to tighten the exemption conditions. These safeguards will benefit overseas departments and regions such as Guadeloupe and Martinique, allowing locally produced cement to be exempt from EU carbon fees in the event of natural disasters or other emergencies.

Once finalized, the proposal could expand the scope of the carbon border tax to include additional products such as washing machines and automotive parts. (Translated by Chen Yi-wei) 1150613

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