EU to offer development funding to CBAM-affected countries

The European Union will offer development funding to countries affected by the Cross-Border Carbon Adjustment Mechanism (CBAM). This was announced by the European Commission when presenting its international strategy for securing Europe’s place in global markets.

The document, which sets out the bloc’s new global vision on climate and energy, refers in particular to support through a new instrument, Global Europe, with a proposed budget of €200 billion for 2028-2034 and a target of 30% of spending on climate and the environment.

“As CBAM gradually comes into force, we intend to maximize Global Europe’s contribution to the decarbonization and adaptation needs of developing countries in line with the instrument’s 30% target for climate and environment spending,” the strategy states.

The EU believes that this would help alleviate concerns about the bloc’s legislation, strengthen partnerships, and support broader regulatory reforms. It is noted that to this end, the EU will also mobilize the experience of member states and use the Technical Assistance and Information Exchange Instrument (TAIEX) for a clean transition.

Funding can help developing countries invest in reducing industrial emissions and transitioning to clean energy, which in turn will reduce their costs for the EU carbon border adjustment.

International cooperation on the standardization of sustainable and resource-efficient technologies is also considered an important part of the bloc’s work.

European Commissioner for Energy Dan Jorgensen, according to Reuters, said that the bloc would not repeal its climate laws in response to concerns from trading partners. Instead, Brussels wants to focus on investing in clean industries that could be beneficial to both sides, such as renewable energy and hydrogen production in Africa.

“To the extent that we can help these countries, we will be very open to this, both in terms of considering possible financing agreements and technical assistance,” Jorgensen said in a comment to the agency.

He added that Europe does not intend to back down from the green transition, but is not deaf to the concerns of its partners.

In September, the European Parliament finally approved the simplification of the cross-border carbon adjustment mechanism. In particular, this involves setting a new minimum threshold of 50 tons of imports per year, which will exempt 90% of importers (mainly small and medium-sized enterprises and individuals) from the CBAM carbon tax. The rules for imports that remain subject to the mechanism have also been simplified.