Metallurgy / Chemicals / Rubber & Plastics

The EU carbon tariff is about to be levied, and the international trade enterprises of plastic products should pay attention! On the morning of December 12, the European Commission, the European Council and the European Parliament held the fourth round of tripartite consultations on the EU carbon border adjustment mechanism (CBAM, also known as "carbon tariff"). In the early morning of the 13th, members of the European Parliament reached an interim agreement with the Council to establish the EU carbon border adjustment mechanism to deal with climate change and prevent carbon leakage.

CBAM is one of the core parts of the EU's "Fit for 55" emission reduction plan. In July 2021, the EU released a package of emission reduction plans called "Fit for 55", which includes 12 new laws, including expanding the EU carbon market, stopping the sale of fuel vehicles, imposing aviation fuel taxes, expanding the share of renewable energy, and establishing carbon border taxes. The goal is to reduce carbon emissions by 55% compared with 1990 by 2030.

According to the agreement reached this time, the EU Carbon Border Adjustment Mechanism (CBAM) will be established to make the carbon price paid by EU products under the EU Emission Trading System (ETS) equal to the carbon price of imported goods. This will be achieved by forcing companies importing to the EU to purchase CBAM certificates to pay the difference between the carbon price paid in the producing country and the carbon quota price in the EU emission trading system.

The European Parliament said the law was intended to encourage non EU countries to raise their climate ambitions and fully comply with World Trade Organization (WTO) rules. Only countries with the same climate objectives as the EU can export to the EU without purchasing CBAM certificates. Therefore, the new rules will ensure that the EU and global climate efforts will not cause carbon leakage due to the transfer of production from the EU to other countries.

The Act will apply from October 1, 2023, but there is a transition period during which the importer's obligations are limited to reporting.

According to the research report of the World Bank, if the "carbon tariff" is fully implemented, in the international trade market, Made in China may face an average tariff of 26%, and the export volume of international trade may decline by 21%. For the export enterprises of plastic products in international trade, this will inevitably increase the production costs of international trade enterprises, weaken the competitiveness of products, and even some enterprises with high pollution and high energy consumption will be eliminated.