BRUSSELS — Europe’s most energy-intensive industries are worried the European Union’s carbon border tax will go too soft on heavily polluting goods imported from China, Brazil and the United States — undermining the whole purpose of the measure.

From the start of next year, Brussels will charge a fee on goods like cement, iron, steel, aluminum and fertilizer imported from countries with weaker emissions standards than the EU’s.

The point of the law, known as the Carbon Border Adjustment Mechanism, is to make sure dirtier imports don’t have an unfair advantage over EU-made products, which are charged around €80 for every ton of carbon dioxide they emit.

One of the main conundrums for the EU is how to calculate the carbon footprint of imports when the producers don’t give precise emissions data. According to draft EU laws obtained by POLITICO, the European Commission is considering using default formulas that EU companies say are far too generous.

Two documents in particular have raised eyebrows. One contains draft benchmarks to assess the carbon footprint of imported CBAM goods, while the second — an Excel sheet seen by POLITICO — shows default CO2 emissions values for the production of these products in foreign countries. These documents are still subject to change.

National experts from EU countries discussed the controversial texts last Wednesday during a closed-door meeting, and asked the Commission to rework them before they can be adopted. That’s expected to happen over the next few weeks, according to two people with knowledge of the talks.

Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM.

For example, some steel products from China, Brazil and the United States have much lower assumed emissions than equivalent products made in the EU, according to the tables.

Ola Hansén, public affairs director of the green steel manufacturer Stegra, said he had been “surprised” by the draft default values that have been circulating, because they suggest that CO2 emissions for some steel production routes in the EU were higher than in China, which seemed “odd.”

“Our recommendation would be [to] adjust the values, but go ahead with the [CBAM] framework and then improve it over time,” he said.

Antoine Hoxha, director general of industry association Fertilizers Europe, also said he found the proposed default values “quite low” for certain elements, like urea, used to manufacture fertilizers.

“The result is not exactly what we would have thought,” he said, adding there is “room for improvement.” But he also noted that the Commission is trying “to do a good job but they are extremely overwhelmed … It’s a lot of work in a very short period of time.”

While a weak CBAM would be bad for many emissions-intensive, trade-exposed industries in the EU, it’s likely to please sectors relying on cheap imports of CBAM goods — such as European farmers that import fertilizer — as well as EU trade partners that have complained the measure is a barrier to global free trade.

The European Commission declined to comment.

Default versus real emissions

Getting this data right is crucial to ensure the mechanism works and encourages companies to lower their emissions to pay a lower CBAM fee.

“Inconsistencies in the figures of default values and benchmarks would dilute the incentive for cleaner production processes and allow high-emission imports to enter the EU market with insufficient carbon costs,” said one CBAM industry representative, granted anonymity to discuss the sensitive talks. “This could result in a CBAM that is not only significantly less effective but most likely counterproductive.”

The default values for CO2 emissions are like a stick. When the legislation was designed, they were expected to be set quite high to “punish importers that are not providing real emission data,” and encourage companies to report their actual emissions to pay a lower CBAM fee, said Leon de Graaf, acting president of the Business for CBAM Coalition.

But if these default values are too low then importers no longer have any incentive to provide their real emissions data. They risk making the CBAM less effective because it allows imported goods to appear cleaner than they really are, he said.

The Commission is under pressure to adopt these EU acts quickly as they’re needed to set the last technical details for the implementation of the CBAM, which applies from Jan. 1.

However, de Graaf warned against rushing that process.

On the one hand, importers “needed clarity yesterday” because they are currently agreeing import deals for next year and at the moment “cannot calculate what their CBAM cost will be,” he said.

But European importers are worried too, because once adopted the default emission values will apply for the next two years, the draft documents suggest. The CBAM regulation states that the default values “shall be revised periodically.”

“It means that if they are wrong now … they will hurt certain EU producers for at least two years,” de Graaf said.