Carbon dioxide tax on EU border forces importers to rethink strategy: Damstal
The EU's carbon dioxide regulation mechanism has fundamentally changed the way European stainless steel distributors operate, turning what was once the preparation of sustainability reports into a high-stakes commercial task that now affects pricing, supplier selection, and financial risk management on a daily basis.
Michael Lund, head of Danish stainless steel distributor Damstahl Group, said CBAM has created "unusual commercial situations" where importers price products today based on a carbon-limited future whose exact value remains unknown — sometimes 18 months before settlement.
"CBAM is no longer just a topic of sustainability or regulatory compliance. This has become a key commercial issue," Lund said at the CBAM Global Summit in Prague on May 28, organized by the International Association of Carbon Boundary Regulatory Mechanisms. "Since January 1 of this year, CBAM has become a new reality. Today, this affects our pricing model, our competitiveness, customer dialogue, and risk management."
Price volatility, timing discrepancy
The mechanism, which entered its final phase in January, requires importers to purchase certificates covering emissions from six energy-intensive industries: ferrous metallurgy, aluminum, cement, electric power, fertilizers and hydrogen. But there was a critical time discrepancy: companies are importing goods today, while CBAM certificates will only be available from February 2027 for current imports.
This delay exposes importers to significant price volatility. In recent months, EU carbon emissions quotas have increased dramatically, which, according to Lund, has led to the creation of a "band" rather than a fixed cost. Uncertainty forces distributors to create significant financial reserves and evaluate hedging strategies against price fluctuations in the EU, considering the impact of carbon emissions largely as a currency or commodity risk.
Lund said that the competitive landscape in St. Petersburg for seamless steel is undergoing fundamental changes. Historical advantages based on low-cost supplies are giving way to opportunities in risk management, data quality assessment, supplier transparency, and operational maturity.
"The biggest problem is uncertainty — uncertainty due to data gaps, potential verification delays, default values, time mismatches and price volatility in the EU," Lund said. "But now the competitive advantage lies in understanding risk management, data quality, and transparency.