(Bloomberg) -- The European Union is working out how to treat a United Nations-supervised offset program under the bloc’s carbon border levy.
The EU Carbon Border Adjustment Mechanism will start operating fully in 2026, imposing a price on emissions linked to a range of imported products. Fees paid in the country of origin may be taken into account if they are part of compulsory programs to reduce greenhouse gases.
The European Commission is analyzing how to treat carbon offsets allowed in third countries’ compliance schemes, Vicente Hurtado Roa, an official of its taxation directorate, told a conference in Brussels on Thursday.
In that context, progress made under Article 6.4 of the UN’s Paris Agreement will also be considered, he said. The article refers to a carbon offset program supervised by the UN that nations worldwide approved at the COP29 climate summit in Baku last month.
A potential nod by the EU for third countries’ compliance programs with offsets to be accepted under CBAM could stimulate demand for the credits.
Offsets generated beyond EU borders cannot be directly used to meet the bloc’s 2030 climate target because it requires domestic emissions cuts.
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