The European Commission has proposed the inclusion of a new Article 27A in the regulation of the Carbon Border Adjustment Mechanism (CBAM), aimed at addressing situations in which the mechanism may cause serious price distortions in the EU internal market.
Under the current structure of the CBAM, the Commission does not have the power to suspend or exclude goods from the scope of the mechanism. Any permanent change to Annex I, which currently covers iron and steel, hydrogen, cement, fertilisers, aluminum and electricity, would require a full legislative amendment adopted by both the European Parliament and the Council.
Temporary and exceptional exemption of goods
The proposed Article 27A would introduce a temporary and an exceptional protection tool. If approved by co-legislators, this would allow the Commission to temporarily exclude specific products from CBAM coverage if there is evidence that their inclusion causes serious harm to the EU internal market, especially through significant and unanticipated effects on prices.
Before taking action, the Commission will have to carry out a formal assessment to ensure that the conditions for intervention are met. If the assessment confirms the existence of a serious market disruption, the Commission may act through a delegated act, allowing for a faster response than the standard legislative process.
Retroactive application possible
A notable feature of Article 27a is
