CBAM is the first unilateral measure with carbon emissions at its core, but it will never be the last. While the impact of the CBAM on China's exports may not be immediate, it sends a clear message: in the era of climate change, a new factor will affect the competitiveness of ** and the country: carbon.
The CBAM will cover steel, cement, aluminum, fertiliser and electricity as proposed by the Commission, and extend to hydrogen, as well as certain upstream as well as some downstream products such as screws and bolts and similar items iron or steel.
The scope of CBAM is likely to be expanded again before the end of the two-year transition period from 2023 to 2025 to include other product categories at risk of carbon leakage, such as organic chemicals and polymersThe overall goal is to cover all goods under the scope of ETS in 2030. (Power industry (large power stations and other combustion units);Manufacturing (steel, cement, aluminum, fertilizers, glass, ceramics, non-ferrous and ferrous metals, petrochemicals);transport (aviation industry)).
Regarding the carbon certificate price, the CBAM mechanism currently sets the carbon certificate price to be updated once a week, and the weekly carbon certificate price is set according to the weekly average of the ETS daily ** price of the previous week as the standard baseline, and if there is no transaction within a week, the weekly average of the daily ** price two weeks ago is used as the standard baseline, and so on. The CBAM certificate is a unit of measurement for the carbon footprint of imported commodities under the CBAM mechanism, and the carbon tariff declaration and settlement of commodities under the CBAM mechanism are carried out according to the total annual import volume, so as to reduce the workload caused by the frequent declaration of each batch of imported goods.
The CBAM mechanism allows importers to apply for carbon credit relief for goods if the commodity producer has taken an EU-recognised carbon footprint offset measure in the country of origin. For example, producers offset their annual carbon footprint in the country of origin through carbon trading, or through the purchase of carbon credits.