The EU carbon tariff is coming, which will have the greatest impact on domestic aluminum exports!

On June 22, the European Parliament passed a proposal for a carbon border adjustment mechanism, which will be implemented on January 1 next year. The European Parliament has passed a new proposal for carbon tariffs, which will affect some export products from China’s chemical, aluminum, plastics and other industries.

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2023-2026 is a transition period for the implementation of carbon tariffs. From 2027, the EU will officially introduce a comprehensive carbon tariff. Importers need to pay for the direct carbon emissions of their imported products, and the price is linked to the EU ETS.
The proposal adopted this time is based on the revised draft of the June 8 version. According to the new proposal, in addition to the original five industries of steel, aluminum, cement, fertilizer and electricity, four new industries will be included: organic chemicals, plastics, hydrogen and ammonia.

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The passage of the EU carbon tariff legislation makes the EU carbon border adjustment mechanism finally enter the stage of legislative implementation, becoming the first mechanism in the world to respond to global climate change with carbon tariffs, which will have a greater impact on global trade and the industries behind it. After the implementation of the EU carbon tariff, it will increase the cost of Chinese companies exporting to the EU by 6%-8%.
According to the data of the General Administration of Customs queried by the editor of Aluminum Watch, from January to May this year, the amount of China’s organic chemicals exported to the EU was 58.62 billion yuan, accounting for about 20% of the total export value; aluminum, plastics and their products were exported to the EU The proportion of iron and steel exports to the EU is 8.8%; the proportion of fertilizer exports to the EU is relatively small, about 1.66%.
Judging from the existing export proportion data, the domestic organic chemical industry will be most affected by carbon tariffs.

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An industry insider who did not want to be named told Liankantianxia that carbon tariffs will increase the operating costs of domestic chemical companies and weaken their international competitiveness. However, there is still a grace period of several years before the official implementation of carbon tariffs. Chemical companies can take advantage of these years to adjust their industrial structure and develop towards high-end. The levy of EU carbon tariffs will also have a certain impact on the export of iron and steel products and some mechanical and electrical products, and will inevitably promote the low-carbon development of the domestic iron and steel industry and the energy structure system.
Baosteel (600019.SH), the largest listed steel company in China, pointed out in its “2021 Climate Action Report” that the carbon tariff measures introduced by the EU will affect the company’s future product exports. , the company will be levied a carbon border tax of 40 million to 80 million euros (about 282 million to 564 million yuan) every year.
According to the draft carbon tariff, the carbon pricing and carbon market policies of exporting countries will directly affect the carbon cost that the country needs to bear to export EU products. The EU carbon tariff will set corresponding offset policies for countries that have implemented carbon pricing and carbon markets. In July last year, China established a national carbon market, and the first batch of power companies were included in the market. According to the plan, during the “14th Five-Year Plan” period, the remaining high-energy-consuming industries such as petrochemicals, chemicals, building materials, steel, non-ferrous metals, papermaking and civil aviation will also be gradually included. For China, the existing carbon market only includes the power sector and lacks a carbon pricing mechanism for high-carbon industries. In the long run, China can actively prepare for carbon tariffs by establishing a sound carbon market mechanism and other measures.


Post time: Jun-27-2022