European Union governments have reached a deal on the world’s first major carbon border tax, as part of an overhaul of the bloc’s flagship carbon market that aims to make its economy carbon-neutral by 2050.EU ministers finalized details of the Carbon Border Adjustment Mechanism early Sunday after reaching a provisional agreement earlier on in the week.It also disincentivizes EU companies from moving production to more tolerant countries, something that EU lawmakers refer to as “carbon leakage.”Under the new mechanism, companies will need to buy certificates to cover emissions generated by the production of goods imported into the European Union based on calculations linked to the EU’s own carbon price.The European Union and the United States have already butted heads over President Joe Biden’s $370 billion climate plan under the Inflation Reduction Act, which EU officials say will hurt European companies selling into the US market.She added that certifying carbon emissions in producing countries remains a “challenge.”Climate policy overhaulThe carbon border tax is part of a wider deal agreed to Sunday that reforms the EU carbon market to cut its emissions 62% by 2030, compared to 2005."