The EU’s Carbon Border Tax After COP30

Hello! Today is 8 December 2025, and here is the EU news you need this week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn.

Pierre Leturcq is a Senior Associate at think tanks E3G and IEEP, a consultant on European affairs, and a lecturer at Sciences Po. He is also the founder and coordinator of the Green Trade Network, a network of experts specialising in the intersection of international trade and environmental protection.

The 30th United Nations Climate Change Conference (COP30) was held in Belém, Brazil, from 10 to 22 November. COP30 again highlighted strong resistance from many countries — led by China, Saudi Arabia and India — to the EU’s planned carbon border tax, the Carbon Border Adjustment Mechanism (CBAM).

Who Do I Call If I Want To Call Europe

The EU sits as a distinct party to the UNFCCC and the Paris Agreement, while each of the 27 Member States also has its own seat.

Before each COP, environment and climate ministers meeting in the Council adopt “negotiating conclusions” that bind the EU and its Member States on key questions such as emission‑reduction targets, finance, adaptation and carbon markets.

The European delegation brings together negotiators from the Commission (led by DG CLIMA), the EEAS and the Member States, who coordinate their positions constantly in internal “EU coordination” meetings before each negotiating session.

Member states do not sit as independent delegations facing the EU on issues covered by the mandate, allowing the EU to “speak with one voice” on common positions.

The EU’s COP30 negotiating mandate was only secured after deep disagreements between member states over the level of ambition and the use of international carbon credits.

Some countries, led by Italy and Poland, considered the greenhouse‑gas reduction goal — 66.25% to 72.5% by 2035 depending on the country, and 90% by 2040 compared to 1990 — too costly and demanded more flexibility.

Others, notably Spain and Sweden, pushed for a stricter target without heavy reliance on carbon credits to offset emissions instead of cutting them.

Defense Mode on CBAM

Concerns over unilateral trade measures such as the EU’s CBAM were omnipresent at COP30.

CBAM will, from 1 January 2026, apply to imports a carbon price equivalent to that of the EU Emissions Trading System (ETS) in order to ensure fair competition and avoid carbon leakage to less‑regulated countries, in six carbon‑intensive sectors: cement, aluminium, steel, fertilisers, hydrogen and electricity.

For many non‑European countries, CBAM is seen as a protectionist and discriminatory initiative that unilaterally applies EU climate standards to developing countries.

The European delegation feared COP30 would turn into a CBAM‑focused “EU‑bashing” session.

Climate Commissioner Wopke Hoekstra expressed frustration at seeing major fossil‑fuel exporters brand CBAM as a protectionist trade tool without acknowledging the need to ensure a level environmental playing field between European and non‑European firms.

China reportedly offered the EU concessions on the COP30 final text on mitigation in exchange for outright repeal of CBAM.

But the COP30 final document strikes a relatively conciliatory tone on the future of climate measures with trade impacts.

It states that “measures taken to combat climate change,

including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”

COP30 even saw the emergence, at Brazil’s initiative, of a fledgling “Integrated Forum on Climate Change and Trade” (IFCCT) to better align trade regimes with climate ambition.

Crunch Time For CBAM

On 10 December, the European Commission is due to present a major legislative proposal on the future of CBAM, intended to limit circumvention, prepare an extension of the sectors covered and support EU industries exposed to the phase‑out of free CO₂ allowances.

The gradual disappearance of free allowances by 2035 is sharpening tensions.

EU industries exposed to international competition still receive free allowances under the EU ETS, which lowers their carbon bill compared to the market price.

Companies fear a loss of competitiveness in markets without a carbon price and are pushing for mechanisms akin to export rebates, which are legally fragile under WTO rules and run counter to the logic of CBAM.

The Commission is therefore expected to refrain from extending free allowances and instead favour targeted financial aid calibrated to the actual risk of market‑share loss. It must also take a position in the debate on methods for calculating embedded emissions in imports.

Under CBAM, importers must buy certificates corresponding to the embodied emissions of their products, which requires measuring those emissions either on the basis of real (declared and verified) data or, in the absence of reliable data, using “default values” (average carbon intensity by product and country).

Finally, the Commission is working on extending CBAM to other sectors, which is already prompting reactions from some partners, particularly China, worried about the possible inclusion of components for solar panels or electric vehicles.

US NATIONAL SECURITY • The new US National Security Strategy released on December 4, reframes Europe less as a privileged ally than as a continent in “civilisational” crisis threatened by migration, low birth rates and overregulation. The strategy signals the US’s goal of “cultivating resistance to Europe’s current trajectory within European nations”.

Two days before the publication of the document, US ambassador to the EU Andrew Puzder penned an op-ed in the FT, calling the EU to repeal the Corporate Sustainability Due Diligence Directive (CS3D). The CS3D, a “gargantuan regulatory apparatus” in the words of the US ambassador, is tantamount to “economic suicide” to the EU.

TURNING THE TAP OFF • The EU has agreed on a binding timetable to end all imports of Russian natural gas, under a provisional political agreement found between the Council of the EU and the Parliament on December 3.

Under the deal, liquefied natural gas purchases must stop by late 2026, with pipeline deliveries ending by autumn 2027, while short‑term contracts face earlier cut‑off dates. The phase‑out aims to curb Russia’s war revenues and accelerate diversification towards alternative suppliers and renewables.​

The EU imported around 40% of its gas from Russia before the war broke out in 2022. It has since shifted quickly to alternatives and renewables and now relies mainly on supplies from Norway and the US.

WHATSAPP PROBE • The Commission has launched an antitrust investigation into Meta’s new rules for AI tools on WhatsApp, focusing on whether they unfairly limit rival chatbot providers’ access to the platform while favouring the in‑house “Meta AI” assistant.

The probe will assess possible abuse of dominance in the EU and could, if infringement is found, lead to significant fines and binding changes to how AI services are integrated into WhatsApp.

X FINE • The Commission has imposed a €120 million fine on X, its first-ever penalty under the Digital Services Act, for breaching transparency obligations on verification, advertising and data access for researchers.

The Commission concluded that the paid blue checkmark system misleads users about account authenticity and that X’s ad repository lacks key information on content and sponsors.​

While Elon Musk denounced regulatory overreach. X now has 60 to 90 days to present corrective measures, as broader DSA probes into illegal content and disinformation on the platform continue.

• How does the EU manage to produce so much legislation? While its institutional setup is highly fragmented, the European machinery is surprisingly productive when it comes to making rules. A useful explanation by former MEP Luis Garicano on Silicon Continent.
• The Economist’s Charlemagne column digs into the ongoing investigation into the establishment of the European Diplomatic Academy at the College of Europe in Bruges.