The incoming Carbon Border Adjustment Mechanism (CBAM) needs more work before it is rolled out in the EU and should run parallel to safeguard measures, not replace them. So said steel industry panel participants at last week’s European Economic Congress in Katowice monitored by Kallanish.
CBAM comes into force from 1 January 2023 but only in a transitional phase, with importers needing to fulfil transitional reporting obligations, without the need to purchase CBAM certificates. The certificate purchase requirement and therefore increase in costs will start from 2026.
Current EU safeguards expire in mid-2024, meaning an 18-month period where the EU market is unprotected from imports, said Polish Steel Association (HIPH) president Stefan Dzienniak. The association will therefore, together with Eurofer, request the European Commission provide further protection.
“We fear CBAM because we don’t understand the mechanism,” said Cognor chief executive Przemyslaw Sztuczkowski. It may not be sufficient to protect the EU market, especially since producers are seeing free CO2 emissions allocations phased out each year, he added.
Polish economic development and technology ministry undersecretary of state Mariusz Golecki said CBAM should not replace free allowances but complement them. “We will do everything we can to extend the period of free allowances,” he observed.
ArcelorMittal Poland (AMP) head of corporate governance & government affairs, head of energy & environment office Tomasz Slezak pointed out that CBAM is an environmental measure, not something to replace safeguards. Removing the latter would “not end well”, he commented. The emissions allowances phaseout must be complementary to CBAM.
He also added that CBAM is an incomplete system as it provides no solutions for EU businesses exporting steel outside the bloc – these will require some form of compensation.
Polish Union of Steel Distributors (PUDS) ceo Iwona Dybal meanwhile said that although various EU steel user groups have requested for safeguards to be removed, PUDS is not among them. This is because it wants to support the bloc’s market by maintaining stability, which would be threatened if safeguards were removed. Following the redistribution of Russia’s quotas, Turkey and India have only used up around half of their hot rolled coil allocations – this suggests supply is sufficient, she concluded.
Adam Smith Germany