CBAM was finally adopted by the plenary session of the European Parliament on April 18, and the text of the CBAM bill was officially published in the Official Journal of the European Union on May 16, and CBAM entered into force into EU law on May 17. CBAM is a popular GHG industry circle of friends, but also the attention of many import and export trade enterprises, in this small series also talk about CBAM, and share the relevant knowledge points of CBAM with you.

What is CBAM？

The Carbon Border Adjustment Mechanism (CBAM, commonly known as "carbon tariff") is a new policy proposed by the European Union, which essentially establishes a virtual carbon pricing mechanism for imported products.

Which industries are covered by CBAM？

CBAM's product range is finally determined to cover steel, cement, aluminum, fertilizer, electricity and hydrogen, six categories of products.

As for the rumor that CBAM will eventually cover all imported products in the EU in the future, Xiaobian can clearly say that this is impossible, because the products included in CBAM will inevitably be in the EU carbon trading industry catalog, and for the EU itself is not included in its carbon trading system, the EU itself does not carry out carbon emission rights control. Not to mention carbon tariffs on external imports.

CBAM has a dual role？

The first is to prevent carbon leakage.

Carbon leakage refers to the adoption of carbon dioxide emission reduction measures in a country or region, and the production of some products in that country or region (especially high energy consumption products) may be transferred to other countries or regions that have not adopted carbon dioxide emission reduction measures. For the EU, although the EU carbon leakage has reduced its internal carbon emissions, the carbon emissions are still not effectively reduced on a global scale, which violates the EU's policies and emission reduction targets for the global environment. Through CBAM, we can put pressure on other countries in the world, and promote the globalization process of carbon reduction by making countries and regions with high carbon emissions pay attention to the concept of energy conservation and emission reduction.

The second is protecting the economy.

The transfer of carbon emissions out of the EU can reduce production costs for enterprises and avoid the burden of carbon emission tax. However, it will lead to the loss of manufacturing and jobs within the EU, which will have a negative impact on the local economy. With CBAM, the EU can prevent this from happening, thereby protecting the interests of local manufacturing.

CBAM is not a product carbon footprint？

First of all, CBAM requires the declaration of carbon emissions of products, but this is limited to the production and processing process of related industries, does not involve the upstream and downstream, and is not the "full life cycle carbon footprint", while the product carbon footprint is usually evaluated by the life cycle method. Therefore, it is clear that CBAM is not the product carbon footprint. The emissions of CBAM are more similar to the emission information report of China's emission control enterprises supplementary data table, of course, the specific accounting rules of CBAM have yet to be further released.

CBAM is not a carbon footprint? Doesn't matter if it's a carbon footprint? Of course not! On the contrary, carbon footprint is very important! For example, the European Union's new battery regulations put forward clear requirements for product carbon footprint declaration and labeling. The systematic boundaries of product emissions required to be reported under the new EU battery regulations can be clearly defined in the table below, which requires the reporting of the product's carbon footprint.

At the same time, many industries in China, and even the document of The State Council have made it clear to carry out carbon footprint research, which shows the importance of product carbon footprint in future global trade！

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Whether it is the EU CBAM, the new battery law, or the Clean Competition Act (CCA, the US version of carbon tariffs) being discussed in the United States, it sends a clear signal that carbon reporting and management should be included as an important strategy for corporate sustainability goals!

At a time when global climate change has become an increasingly prominent issue, low-carbon development has become the focus of attention of all countries in the world, and even become a strategic plan to adjust trade strategies.

We believe that low carbon will become the next frontier to strengthen the comprehensive competitive advantage of enterprises, but also the future！