Since October 1, 2023, the two-year transition period of the EU Carbon Border Adjustment Mechanism (CBAM) has passed halfway, and its impact is gradually becoming apparent. It not only reshapes the EU's carbon emission management system, but also has a profound impact on the global trade pattern. During this year, especially in the steel and aluminum products industry, as well as some downstream machining enterprises, they became the first industries to face the carbon inventory data requirements of overseas importers.

Starting from July 1st this year, the EU has set stricter thresholds for the proportion of default values used in precursor materials. Specifically, once the usage rate of default values exceeds 20%, it will be considered an estimated situation by the EU, which will affect data quality and fail to meet EU data requirements. This new regulation has brought considerable challenges to terminal machining enterprises and product export enterprises.

As reliance on default values is no longer allowed, these enterprises need to actively request emission data from upstream links from suppliers. This is because only by accurately grasping the carbon emission data of the entire chain can a report that truly reflects the actual emission situation of the product be calculated. In addition, in order to leave more room for adjustment for enterprises, the EU stipulates that importers still have the right to modify the data submitted using default values for the first three quarters before July 31st. However, based on the reporting situation on January 31st this year, many companies relied mainly on default values or settings at that time.

After July 1st, the EU further strengthened the requirement for the authenticity of data verification. This means that importers and exporters who previously reported their own data may now need to seek authoritative institutions like SGS to conduct actual data checks and provide verified real emission data.

With the end of 2024, production enterprises related to CBAM (Carbon Border Adjustment Mechanism) face new challenges - submitting annual carbon inventory data in the following months. Specifically, production enterprises are required to submit complete carbon inventory data for the entire year of 2024 before January 31, 2025. Due to having only one month to collect, organize, and calculate data for the entire year of 24, there is considerable pressure and difficulty for the enterprise.

This new requirement brings dual challenges: firstly, the increased demand for measured data means greater workload and more complex communication tasks for enterprises; Secondly, companies cannot wait until the last moment to start preparing and organizing data. In order to ensure the progress and accuracy of data reporting, and avoid passive situations caused by time constraints or facing penalties from the EU due to inability to submit on time, it is recommended that companies collect, organize, and submit reports to importers before the end of December.

According to the latest official news from the European Union, the standards for CBAM carbon verification and the identification information of verification agencies are expected to be officially released in the first half of next year. This important measure marks the further improvement and refinement of the CBAM system, providing clearer and more transparent guidance for data review and verification for enterprises.

The Carbon Border Adjustment Mechanism (CBAM) of the European Union is playing a leading role. The UK has clearly stated that it will introduce regulations similar to CBAM, aimed at aligning with this mechanism and potentially forming a mutually recognized system in the future. In addition, the United States, Canada, Australia, and Japan also plan to implement similar regulations requiring exporters to provide carbon emission data. Enterprises need to closely monitor this trend. It goes without saying that reducing carbon emissions has become a common pursuit of various industries around the world. Productive enterprises should carry out technological innovation as soon as possible to adapt to the trend of green transformation in this industry.

The chemical industry is one of the main areas of greenhouse gas emissions and energy consumption, and therefore plays an important role in carbon reduction and sustainable development. The EU officials will re-examine the emissions and energy consumption of the chemical industry before the end of the transition period to assess whether it should be included in the formal implementation period. It is worth noting that this process will adopt a gradual approach, rather than encompassing the entire chemical industry in one go.

It is expected that the EU will start with basic chemical products and gradually expand to fields such as fine chemicals and polymer materials. This phased strategy helps ensure the smooth implementation of policies while providing sufficient time for the chemical industry to adjust and adapt. The decision before the end of the transition period in 2025 will have a significant impact on the future development of the chemical industry in Europe and even globally. When addressing the challenges of carbon emissions and sustainability, chemical companies need to closely monitor policy developments and develop corresponding strategies to adapt to the constantly changing market environment. The Carbon Border Adjustment Mechanism (CBAM) of the European Union is gradually converging with other carbon emission trading systems, especially aligning with the scope of control of the European Emissions Trading System (EU-ETS).

In addition to the traditional chemical industry, multiple industries such as glass and paper will also be affected by the expansion of CBAM policies. This means that companies in these industries will face stricter carbon emission regulations and need to take effective measures to reduce their own carbon emissions.

For enterprises that have industrial cooperation and export trade relations with the EU, it is crucial to closely monitor the latest developments in carbon emission policies. Enterprises should prepare in advance, formulate and implement effective emission reduction measures to cope with possible carbon emission regulatory requirements in the future. By timely adjusting and optimizing production processes, adopting clean energy and low-carbon technologies, enterprises can not only reduce carbon emissions, but also enhance their competitiveness and achieve sustainable development on this basis.