German steel and metalworking industry federation Wirtschaftsverband Stahl- und Metallverarbeitung (WSM) has stated that the EU’s Carbon Border Adjustment Mechanism (CBAM) could impose an additional cost on German steel companies of up to €2 billion.
The federation stated that the CBAM will protect the steelmakers from foreign competition with greater carbon pollution at a lower carbon price, though it will harm steel processors significantly due to rising input material costs.
WSM has criticized the limitation of the mechanism to steel, cement and aluminum, and has called on the European Commission to update the regulation and involve the entire value chain.
The WSM statement said that the regulation of the European Commission will swallow the entire two percent return on sales of a steel producer, especially since medium-sized companies cannot reflect their costs. WSM argued that, as most companies are strong exporters, the national costs of carbon certificates should be reimbursed in final product exports, as is the case with steel.