The European Steel Association (EUROFER) has released a joint statement by sectors affected by the Carbon Border Adjustment Mechanism (CBAM), including the European Association of Metals (Eurometaux), the European Cement Association (Cembureau), Fertilizers Europe and European Aluminium, regarding the EU Emission Trading System and the CBAM.
The associations stated that it is indispensable to achieve the EU’s climate ambition for 2030 in a sustainable and socially-fair manner in an economic environment with skyrocketing energy prices, high inflation, soaring carbon prices and related indirect costs, and raw material shortages.
In addition, the business case for low carbon investments in Europe is heavily challenged by the different regulatory and financial frameworks being developed by these industries’ trading partners. For instance, the Inflation Reduction Act will provide financial support for around $370 billion to low carbon investments in the US’s industry and energy, with a likely impact on global competition.
According to the joint statement, the transitional period 2023-25 is not a real test period since importers will not pay the CBAM levy during that period. Moreover, a fast free-allocation phase-out will expose the EU industry to significantly higher carbon costs. This would inevitably reduce these industries’ financial ability to invest in decarbonization projects by 2030.
There are concerns that the CBAM would restrict EU’s competition, under these circumstances. The associations emphasized the need to improve and strengthen the CBAM.