Italy to discuss CBAM changes with Brussels

The Italian parliament has approved a motion that will force the government to work with the European Commission (EC) to review certain elements of the Carbon Border Agreement Mechanism (CBAM), Kallanish notes.

“We hope that the Italian government will propose the necessary legislative changes,” the local steel trade association Assofermet says in a document.

Among the various concerns discussed in the Italian chamber of deputies, one of the crucial points is the difficulty in gathering the data to be provided to the EC.

“The first deadline of the end of January 2024, to communicate data relating to imports for the fourth quarter of 2023, has unfortunately confirmed all our predictions,” says Assofermet’s steel division director Paolo Sangoi. “It is extremely difficult to find the required information from suppliers and major complications occurred when entering the data into the system. There are many (third countries’) producers who declare themselves unavailable to provide certain data considered extremely confidential.”

Another point of concern is the inclusion of raw materials such as pig iron and semi-finished products within the CBAM mechanism. Finished products produced outside the EU using the same raw materials can be freely imported. This will result in a higher cost of raw materials for EU producers, unlike their foreign competitors who will be able to count on cheaper raw materials.

“This is a series of glaring regulatory mistakes: The consequences on the competitiveness of the local manufacturing sector were evidently not taken into account during the (CBAM) study phase,” Sangoi concludes.

Assofermet warns of a serious risk of delocalisation of the manufacturing sector as several producers will move their production sites to areas with less restrictive geographic areas.

Earlier this year, Assofermet said the normative framework of the mechanism and safeguards on steel imports is hindering the daily activity of Italian and European steel companies. The challenges in filling CBAM reports, the economic repercussions expected from the mechanism starting in 2026, as well the safeguard measures in force from 2018, are a deep concern for Assofermet’s members.

In August, the EC published the details to be considered in the implementation of CBAM regulation in practice. The document of 102 pages “was full with legal and technical terms which most companies will have never heard of,” writes Andreas Schneider of Stahlmarkt Consult. In his latest blog titled “The Introduction of CBAM: A Disastrous Start,” Schneider points out that the new duties are a burden especially for smaller enterprises with limited staff for legal matters.

According to Wood Mackenzie, the mechanism could add $275/tonne of cost for some key finished steel exporters to the EU, while the increased domestic production costs could lead to a political backlash. The CBAM fees could increase the cost of delivered steel to the EU by about 56% for India and about 49% for China in 2034, the consultancy notes. One initial response for exporters to the EU is likely to be a reorganisation of sales to direct lower-emissions steel to the European market, while higher-emissions production is diverted to markets without carbon fees. The EU plans to monitor and address these strategies, but it does not have a concrete action plan to prevent them, Wood Mackenzie says (see Kallanish passim).

Natalia Capra France