The European Union reached a provisional agreement on a carbon border adjustment mechanism on 13 December 2022, a landmark step for steel trade. Under the deal between the Council and the European Parliament, importers of iron and steel, cement, aluminium, fertilisers, electricity and hydrogen will have to buy certificates priced on the EU emissions trading system, matching the carbon cost paid by European producers. The mechanism will apply from 1 October 2023, with a transition period of reporting only until 2026, while free allowances for European industry are phased out between 2026 and 2034. For steel exporters to Europe, including China, the mechanism means carbon intensity will become a commercial factor alongside price and quality. European steelmakers welcomed the deal as protection against carbon leakage, while exporters warned it would add cost and paperwork to every shipment.
Source: Council of the European Union — https://www.consilium.europa.eu/en/infographics/fit-for-55-cbam-carbon-border-adjustment-mechanism/
Photo: Wikimedia Commons (freely licensed).