The European Commission begins consultations on the technical application of CBAM
On Thursday (August 28), the European Commission launched a series of public consultations related to the technical implementation of the Carbon Dioxide Emissions Control Mechanism (CBAM), as a first step in addressing the many uncertainties associated with the upcoming final phase of the instrument.
Steel market participants will welcome such news, although they will probably criticize them for the late launch, especially given the confirmation this week that CBAM will not expect any further delays to the final stage. The final phase of the CBAM, effective from January next year, provides for tax obligations for import-related emissions in accordance with the product codes specified in the CBAM, which are widely applied to European steel imports.
As part of the three consultations, the Commission's latest request for evidence proposes three implementation regulations describing the following aspects: the specific application of CBAM to imports from the bloc, namely:
CBAM calculation methodology[/url];interaction between the Emissions Trading System (ETS)[url=https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/14829-CBAM-certificates-adjustment-of-obligation-to-surrender-them-to-take-account-of-free-ETS-allowances_en], free allocation of emissions and CBAM obligations;The cost of these available reductions, taking into account the carbon prices already paid for embedded emissions.The feedback period will last from August 28 to September 25.
The European Commission recently completed relevant consultations on extending CBAM to processed products to further protect against carbon leakage and eliminate loopholes.
During this series of CBAM consultations, the Commission decided not to conduct additional impact assessments, considering its 2021 review to be completed. sufficient. In its latest information document, the Commission states that the practical implementation of CBAM has "limited technical scope" and includes "costs/economies of limited scale".
Too close for comfort?
McCloskey's sources in the steel market cited CBAM's potential per tonne cost difference, which is significantly higher than 100 euros with the best calculations of various import routes instead of the actual values according to the formula, it is unlikely that many European importers will agree with the Commission's assessment. Indeed, at the 75th European Steel Distribution Association EUROMETAL anniversary conference, CBAM was described as everything from a "nightmare" to a "Molotov cocktail for the entire supply chain".
That said, with further delays to be ruled out and just over four months, the market is likely to prefer administrative certainty.