A Carbon Border Adjustment (CBA) mechanism is a tool to support the EU's climate leadership by reflecting the carbon intensity of products imported into the EU, such as steel. This mechanism is important because EU producers have the highest environmental and climate protection goals in the world - and higher production costs that accompany this effort.
The European steel industry is therefore at very high risk of carbon leakage - the loss of sales to cheaply-priced, carbon-intense imports. Avoiding the risk of carbon leakage is a pre-condition for preserving both the environmental integrity of EU climate policy and industrial competitiveness since it contributes to reducing emissions at a global level while maintaining jobs and investments in Europe. This will also be instrumental in facilitating the social acceptance of EU leadership in climate ambition.
The European Green Deal underlines that the risk of carbon leakage can materialise in different forms, 'either because production is transferred from the EU to other countries with lower ambition for emission reduction, or because EU products are replaced by more carbon-intensive imports'. As long as there is no international binding agreement with a global carbon price and equivalent efforts, it is essential that the EU legislation adopts effective measures that avoid all forms of leakage in the short and medium terms.
The carbon border adjustment measure should be applied for a transition period until breakthrough technologies reach sufficient market penetration and CO2-lean products represent a critical mass in the market. It represents a broader contribution to a clean planet, as it is also an effective tool of political diplomacy to foster climate ambition in third countries so that deeper emission reductions are delivered globally.
Brussels, 13 October 2023 – The EU-US Summit planned for 20 October in Washington should pave the way for a global solution to tackle the two existential challenges facing the steel industry worldwide: non-market excess capacity and carbon intensity. Only a strong, international binding agreement can adequately respond to a new global context where government-fuelled, carbon-intensive excess capacity has reached 600 million tonnes, urges the European Steel Association.
Brussels, 29 September 2023 – The start of the transitional period of the Carbon Border Adjustment Mechanism (CBAM) on 1 October 2023 is a major milestone in the implementation of the EU Green Deal. The initial phase of the CBAM, with simplified monitoring and reporting, will be crucial to assess how watertight its functioning is in preventing carbon leakage in European industrial sectors, such as steel, to other countries that continue to invest in highly CO2-intensive technologies, states the European Steel Association.
Brussels, 13 September 2023 – The European steel sector welcomes the vision for a renewed Industrial Strategy set out by Commission President Ursula von der Leyen in the State of the Union address. Relaunching Europe’s industrial engine with concrete measures in all relevant policy areas should be both a core mission for the final year of this legislature and a top priority for the future EU executive. The European steel sector, which has launched over 60 industrial-scale decarbonisation projects, stands ready to engage with the Commission to develop and implement the urgent actions needed to boost the whole European cleantech ecosystem, says the European Steel Association.