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(Bloomberg) — Early glitches in a European tool to tax pollution related to products made overseas highlight challenges for companies around the world to go green. ing.
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Slow communication and technical problems are hampering companies’ compliance with the European Union’s new carbon border adjustment mechanism, which aims to protect local producers from competition from countries with lower environmental standards. As of February 28, less than 10% of companies in Germany had registered on the platform, according to people familiar with the matter.
In light of these issues, the European Commission announced in an announcement to member states this week that a second report would be due by the end of March, said the people, who requested anonymity because the details are private. It is said that it has been extended.
The tool, aimed at leveling the playing field for domestic manufacturers of energy-intensive goods such as cement and steel, is the latest example of energy transition policies adding layers of bureaucracy to companies. Officials want to prevent pollution spreading outside the region as a result of the EU’s tougher climate change mitigation policies, but there are challenges getting the system up and running.
Due to a software issue, the deadline for importers to register with the mechanism has been delayed by a month from the originally scheduled January 31st. In Germany, where much of Europe’s manufacturing takes place, the authorities responsible for implementing the new tool were only announced late last year, and companies had to rush to register.
Officials said companies were also unsure which importers would have to register for the tool. The European Commission initially said it would target sectors with the highest risk of outsourcing carbon emissions, such as cement, iron and steel, aluminium, fertilizers, electricity and hydrogen, but the scope is much broader, with Germany having up to 2 5,000 companies could be affected. Alone, the people said.
Officials said the commission was still analyzing the exact number of importers that would need to register. By mid-February, more than 11,400 reports had been submitted, mainly from Poland, Germany and Italy, and a further 3,800 were still in the draft stage. The committee plans to further improve its functioning and hold a dialogue with stakeholders next month, the officials added.
Dirk Jandula, president of the German Wholesale, Trade and Services Federation, explained that this is because downstream products such as screws also need to be reported. “Trading companies with less than 20 employees are being hit hard and are just overwhelmed. They need more time to get everything working.”
The EU’s carbon border adjustment mechanism works like a tariff, ensuring that the carbon price of imported goods is equal to the carbon price of domestic goods. Payments are not expected to start until 2026, but companies must start reporting greenhouse gas emissions in their supply chains this year. The commission clarified last month that there are currently no penalties for violations if delays are related to technical errors.
A spokeswoman for the commission did not respond to a request for comment.
–With assistance from Ewa Kurkowska.
(From the third paragraph onwards, the deadline will be extended and updated)
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