The European Union carbon border adjustment mechanism will be implemented in seven months, but the steel industry has not yet been fully prepared for the gradual change of the system suggests, Fastmarkets heard on Thursday May 8 at the Made in Steel exhibition in Milan, Italy.
The CBAM for imported products is proposed by the EU to prevent carbon leakage into the EU Emissions Trading System (ETS), and is expected to enter into force on January 1, 2026.
Despite the short timeframe, participants in the European steel market continue to hide important details about how this mechanism will be introduced.
Effectively, the CBAM will take effect on January 1, but the financial implications will only take effect in May 2027.
"The EU has postponed the operational awarding of CBAM until May 2027 because the[electronic]certification platform is not ready for trade," Alexander Julius, president of the European Steel Distributors Association[b]EUROMETAL[/b], said during his speech in Milan.
The price of the CBAM reference will be linked to the prices of the ced. For example, prices for carbon dioxide emissions in the EU fluctuated around 71.52 euros (80.49 US dollars) per tonne of CO2e in January this year, peaked at more than 81 euros per tonne of CO2e in mid-February, and then fell below 60 euros per tonne of CO2e in early April.
As part of CBAM, participants will have to purchase certificates on the EU platform, and they can also resell those that are not in use, as Fastmarkets understands.
There are actual values for the CO2 content of imported goods, and the European Commission has also introduced default values that may be adopted in the future and will be set in the system. But Fastmarkets understands that the default values will be higher than the actual values.
To import steel under CBAM conditions, companies authorized by customs must be registered on the platform in order to be able to pay for CBAM certificates.
Initially, CBAM declarations will need to be submitted for emissions within 1-2, but eventually also for scope 3.
Applicants will be responsible for declaring incorrect emission values.
Therefore, to ensure greater transparency, non-EU suppliers can register their installations on the EU platform for emission declaration within 1-2. But this must be verified by EU verifiers and certification companies.
"This is a good plan because not every declarant can risk registering[CO2 emissions]on their own," Julius said.
According to his estimates, about 100,000 companies will receive permission to purchase CBAM certificates on the EU platform.
A dangerous misunderstanding