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18/04/2023

European Parliament approves the world’s first carbon border levy.

New reforms mean that there will be a levy on imports of high-carbon goods from 2026, affecting imported fertilisers, cement, steel, aluminium, electricity, and hydrogen.

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On Tuesday (18 April), the European Parliament approved the world’s first carbon border levy, making EU climate change policies more ambitious.

 

The reforms mean that there will be a levy on imports of high-carbon goods from 2026, affecting imported fertilisers, cement, steel, aluminium, electricity, and hydrogen. Furthermore, the EU also approved a landmark deforestation law on Wednesday (19 April, 2023) banning imports if they are linked to deforestation; targeting coffee, beef, soy, palm oil and other high climate-risk commodities.

 

The law will require companies that provide goods into the EU to produce verifiable information proving their goods are not linked to deforestation on land that had been deforested after 2020, or they will be subject to substantial fines..

 

While neither of these new laws target aviation specifically, IBA see an important opportunity to mitigate the potential future impacts of sustainable aviation fuel (SAF) and the indirect land use changes (ILUC) they may cause, especially considering the projected SAF scale-up. The EU has previously addressed the challenges associated with land use change and greenhouse gas emissions to produce biofuels.

 

The current directive sets national limits for high ILUC-risk biofuels produced from food or feed crops that require significant expansion of land with high carbon stock. There will be restrictions for some sectors when calculating the percentage share fuel that can be classed as renewables.

 

By 2030, the EU aims for 0%. However, fuels produced from feedstocks with high ILUC-risk for the aviation and maritime sectors currently have no obligation to participate. This permits the aviation sector and SAF producers to freely participate in ILUC to accommodate the industry’s net zero targets. 

 


 

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