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, 17 May 2022 – The European steel industry calls upon the plenary of European Parliament to fix the disruptive vote on the Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM) cast by its Environment Committee. Today’s outcome endangers €31 billion investments needed for deploying the 60 low carbon projects the European steel industry has in the pipeline, as well as €45 billion in exports value and 30,000 jobs.
It is essential that the implementation of the Fit for 55 Package delivers the agreed 2030 climate targets while supporting companies’ investments, preserving effective carbon leakage measures and avoiding disproportionate costs, capacity closures and job losses.
As representatives of the four industrial sectors to be included in the scope of the EU Carbon Border Adjustment Mechanism – cement, steel, aluminium and
fertilisers – we would like to raise our comments and concerns on the draft INTA compromise amendments (CAM) that will be voted on 28 February.