Position paper – Carbon Border Adjustment Mechanism

As this position paper explains, ACEA believes that the system should be as equitable, predictable and burdenless as possible. At the same time, it should of course be capable of achieving its environmental goals.

European motor vehicle manufacturers are committed to making mobility climate neutral by 2050, in line with the objectives of the Paris Agreement. As part of that approach, many vehicle manufacturers have set ambitious targets to achieve net-zero carbon output by the end of the next decade.

ACEA supports policies and instruments that can help achieve these goals.

Europe’s automobile industry is already subject to the Emissions Trading System (ETS), given that many of its manufacturing facilities as well as those of its suppliers are regulated by it. The influence of the ETS on the industry will only increase as Phase IV progressively removes free allowances from the system and the value of carbon certificates increases.

Our industry also has a global sourcing strategy that depends fundamentally on open and fair trade. Free movement of goods with limited barriers to trade is a vital component to the success of the EU auto sector. This is relevant both to the import of materials and parts into the EU to allow for competitive, sustainable and innovative manufacturing, as well as to the export of finished vehicles to global markets.

With respect to the decarbonisation of fuels and the set-up of the CBAM, besides other policy measures put in place, all energy carriers need to be part of a stronger EU ETS to ensure the decarbonisation of the transport sector as a whole. This will be instrumental in decarbonising Europe’s current vehicle fleet through all energy carriers and in pushing carbon to a price level that starts to drive real change.

At this stage, however, there are many critical unknowns in terms of the design and application of a carbon border adjustment mechanism, how it would impact key EU industries such as automotive, and how it would be received internationally.

If implemented, the mechanism should adhere to a number of key principles according to Europe’s auto manufacturers. Indeed, the CBAM should:

1. Minimise any impact on the competitiveness of European automobile manufacturing.
2. Ensure transparency and fairness in the level of equivalency it applies.
3. Be manageable in the level of administrative burden it creates.
4. Avoid retaliation from third country trading partners.

Only if all these key principles are respected should the European Union endeavour to apply a carbon border adjustment mechanism.