The EU’s carbon border adjustment mechanism (CBAM) will have minimal impact on imports from outside the EU, environmental think tanks Sandbag and E3G said in a report released on Monday (June 3rd).
The European Commission started phasing in CBAM reporting requirements from last October.
This obligation starts in 2026 for aluminium, cement, electricity, fertilisers, hydrogen, iron and steel products and could be rolled out to other sectors.
However, the report said CBAM would only slightly affect imports from outside the bloc due to its narrow sectoral scope and gradual phase-in period through to 2034.
Its coverage would be too limited to have a wider effect, the study said. Although concerns have risen over a potential downturn in imports from China after the legislation is enacted, the report calculates that if CBAM were in place in 2021, it would have had an impact on only EUR 13.4bn (2.8%) of the EUR 474bn worth of goods imported from China that year.
In the most likely scenario, where importers do not change their export patterns, the report said CBAM fees would account for just 0.12% of total imports from China. Fees paid by any single country other than Russia “will not exceed EUR 1bn in any scenario, causing very small impacts on trade partners”.
It said manufacturers could minimise CBAM costs by selecting low-emission goods to export to the EU, with higher-emission goods sold in other markets.
“As the CBAM phase-in combines with the phase-out of free emission permits under the EU ETS, we find that the CBAM might hurt industrial manufacturers based in Europe more than those based in third countries,” the report said. However, it noted that the regulation was a “moving instrument” with review clauses to reshape it if needed.
source: montelnews