Selection of countries impacted by CBAM

Chile:

Chile has an arduous regulation regarding carbon emissions, this is reflected in mobilization, prevention and decontamination plans determined by regions of the country, operation and maintenance of combustion equipment, safety measures in the workplace and, most importantly, the obligation of certain areas and projects to enter the Environmental Assessment System either because the entry of such project to the system is so determined by law or because CO2 emissions exceed the limits allowed by the regulation. Also, in Chile there is an annual tax on emissions into the air of particulate matter (PM), nitrogen oxides (NOx), sulfur dioxide (SO2) and carbon dioxide (CO2), produced by establishments whose emitting sources, individually or as a whole, emit 100 or more tons per year of particulate matter (PM), or 25,000 or more tons per year of carbon dioxide (CO2).

China:

China regulates and monitors CO2 emissions – e.g., Carbon emission quota allocation and registration -, primarily based on industry and emission levels. Entities meeting certain criteria (“Key Emission Entities” published and regularly updated by the competent ecological and environmental authorities at a provincial level) shall be subject to the national CO2 emission reporting and regulating mechanism. China has not formed an integrated regulatory system over CO2 emission management so far and its regulation of CO2 emissions is scattered in various laws and regulations on environment protection where it is foreseen the purchase of carbon emissions allowances, tax incentives and government subsidies. Carbon emission quotas are currently allocated without any associated cost. China Certified Emission Reductions (CCER) can be traded and used to offset carbon emissions. In China there is no rebate mechanism in place for offsetting carbon emissions costs that have already been incurred on imported goods in their country of origin and currently, no specific financial obligations are imposed on the embedded CO2 emissions of products in China.

South Africa:

South Africa's environmental regulatory framework includes the Carbon Tax Act, 2019 and the Air Quality Act. The Carbon Tax Act imposes a tax on certain activities, with some exemptions listed in Schedule 2. The Air Quality Act requires air emission licences for listed activities, which are administered by municipalities. Greenhouse gas measurement guidelines are outlined, and the Carbon Offset Administration Systems facilitate the management of carbon credits. To address trade risks, the Carbon Tax Act allows taxpayers a maximum ten per cent allowance based on import and export values. The Customs and Excise Act of 1964 imposes an environmental levy on imported and domestically produced goods, which contributes to the Carbon Tax Act. Taken together, these measures aim to regulate and mitigate environmental impacts in South Africa.

Turkiye:

The existing CO2 regulatory framework in Turkiye is the Greenhouse Gas Emissions Monitoring Regulation, which sets out procedures for monitoring and reporting greenhouse gas emissions, particularly from activities such as petroleum refining and metal ore roasting in installations with a thermal input of 20 MW or more. Reporting obligations under this regulation include the preparation of and adherence to a monitoring plan, which must be submitted for approval at least six months before the start of monitoring, with an additional sixty days for any necessary corrections. Notably, Turkiye does not currently have a carbon tax system in place. However, Turkiye is taking steps to align with EU legislation and is expected to prepare an ETS regulation to enter into force by the end of 2023, with a transition period until 1 January 2026, similar to CBAM.

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United Kingdom

The UK Department for Energy Security and Net Zero and HM Treasury has confirmed that a UK CBAM will be implemented by 2027. The UK CBAM will impose a levy on those importing the most greenhouse gas (GHG) emissions-intensive products into the UK, which will reflect the gap between the carbon price that would have been imposed if the good had been produced in the UK and the carbon price already applied in the country of origin, if any. The liability will lie directly with the importer of relevant imported products. The precise liability will depend on the GHG emissions intensity of the imported good and the gap between the carbon price applied in the country of origin (if any) and the carbon price that would have been applied under the UK ETS had the good been produced in the UK. Furthermore, it will not cover the importation of electricity, but it will additionally cover ceramics and glass. The relationship between the UK and the EU CBAM is yet to be set out in any detail.

Expertise

Energy & Climate Change Clean Energy, Environment & Climate Change