POLIICY BRIIEF - How the EU’s Carbon Border Adjustment Mechanism discriminates against foreign producers

b) Type of emissions covered – the case of aluminium The ETS covers the release of greenhouse gases into the atmos- 11 rules for the application of Regulation (EU) 2023/956 of the European Parliament and of the phere from sources in an installation. [...] The ‘CBAM factor’ is the fac- tor (carbon intensity benchmark used to calculate the carbon costs The EU ETS does not cover the production of secondary alumi- for imported goods under the CBAM) reducing the free allocation nium or the production or processing of non-ferrous metals with of allowances for the installations producing the goods covered in combustion units with a total rated thermal inp. [...] The CBAM regulation mentions two types of guarantees, one In the draft CBAM text, the names of the authorized decla- in the form of a monetary amount for ‘new’ declarants and one rants and operators, the location and, where appropriate, the in the form of CBAM certificates for all declarants: name of the installations in third countries and their verified emissions, shall be accessible to the publ. [...] nancial years that precede the year when the application for authorization was submitted, the guarantee will be fixed at the In the final CBAM text, information sharing is limited to cus- monetary value of the CBAM certificates that the authorized toms authorities and competent authorities (Article 14 of the declarant would have to surrender in the calendar year during CBAM Regulation). [...] A Note on Article XX of GATT (General Ex- 2) Once authorized, the declarant shall ensure that the number ceptions) of CBAM certificates on its account in the CBAM registry at the end of each quarter corresponds to at least 80 per cent of Based on the findings of the paper, the CBAM has clear discri- the embedded emissions, determined by reference to default minatory impacts to importers.