EUROFER warns that CBAM's proposals identify key loopholes but do not provide comprehensive and structured solutions.
The European Commission's latest proposals for a carbon emissions regulation mechanism (CBAM), unveiled today, correctly identified several loopholes that could undermine its effectiveness, especially with regard to EU exports, processing sectors, and circumvention methods.
However, despite these laudable efforts, the proposed measures do not provide a comprehensive and long-term response to carbon leakage and jobs, the European Steel Producers Association (EUROFER) warns.
"Recognizing CBAM's weaknesses and offering remedies is a welcome and necessary first step to ensure the effectiveness of the mechanism. However, the solutions proposed in this way are insufficient and do not eliminate the key shortcomings. They do not yet provide the level of protection against carbon emissions and job leakage that a European steel company urgently needs for a successful transition, while maintaining competitiveness in global markets. If the EU wants to lead by example and combine its climate ambitions with a credible industrial policy, CBAM needs to be made reliable and trouble-free from day one," said Axel Eggert, CEO of EUROFER.
In particular, the approach to exports to the EU remains fragmented and lacks a structural solution. The proposed measures are limited both in time (they are designed for only two years) and in terms of output, since they cover less than a quarter of steel exports. Moreover, the financial resources of such a decarbonization transition fund are very uncertain. Without a long-term and comprehensive solution, steel producers in the EU remain at a competitive disadvantage in global markets.
The Commission also fairly recognizes the risks of circumvention, including the reallocation of resources. Such a practice, if not properly considered, will contribute to creative accounting of emissions, artificially underestimating reported emissions, without stimulating their reduction at the global level. While this recognition is welcome, the proposed measures are highly uncertain in terms of timing and effectiveness, as they are not convincing deterrents, but only potential corrections that the Commission may introduce into future implementation rules. The inclusion of scrap ready for use before consumption as a precursor to CBAM, which was a priority only for aluminum companies, could backfire in the steel sector.
With regard to the processing sectors, the Commission proposes to extend CBAM coverage only to a very limited number of processing products. Despite,