Interview with Yang Pingjian: "Carbon tariffs" currently have a limited impact on China's foreign trade, but export enterprises in some industries have been greatly affected, and it is necessary to pay attention to the impact of the EU's new battery law o
October 19,The Center for Public and Environmental Research (IPE) released the sixth annual report of the Supply Chain Climate Action CATI Index at the 2023 Green Supply Chain and Climate Action Forum, showing that under the guidance of environmental information disclosure, important progress has been made in the construction of green supply chain in China in the past decade, providing positive impetus for China's environmental governance and global climate action.
The reporter of "Daily Economic News" noted that from October 1, the implementation rules of the EU Carbon Border Adjustment Mechanism (CBAM) transition period came into effect, and the scope of the current collection includes six major industries of steel, cement, aluminum, fertilizer, power and hydrogen, what impact will this have on China's related industries and enterprises?
In response to this problem, the "Daily Economic News" (hereinafter referred to as NBD) reporter during the forumYang Pingjian, Director of the Environmental Sociology Research Office of the Chinese Academy of Environmental Sciences, conducted an exclusive interview.
Yang Pingjian Image source: interviewee
The CBAM mechanism is new"Green Barrier"
NBD：How do you rate the introduction and implementation of CBAM?
Yang Pingjian:CBAM was introduced to curb it“carbon leakage" and maintaining a competitive advantage for EU products.
In July 2021, the European Commission proposed"Fit for 55", a package built to meet the EU's commitment to reduce greenhouse gas emissions by at least 55% by 2030, contains CBAM's legislative proposals.
At present, there is no international action“Carbon leakage "rules for delineating responsible subjects can be followed, and unfair competition caused by unbalanced climate policies in different countries does exist, which leaves room for the EU to introduce CBAM.
CBAM can also play a role in maintaining the competitive advantage of EU domestic products. The EU has the world's earliest and most well-established carbon trading market, and the price of carbon allowances once exceeded 100 euros / ton of carbon dioxide. As carbon allowances tighten in the future, carbon prices are bound to rise steadily, adding additional production costs to producers in the EU.
Most countries in the world do not have formal carbon trading markets or carbon taxes, and even if there are carbon emission quota mechanisms, they are relatively relaxed, and the carbon burden on manufacturers is relatively light. Therefore, the EU's imported goods from overseas have a greater price advantage over local goods, which to a certain extent seizes the market for EU products, and then causes problems such as the contraction of the EU's local manufacturing industry.
But this also has an environmental protection lineThe suspicion of unilateralism and trade protection is not in line with the globally recognized principle of common but differentiated responsibilities and the principle of respective capabilities. Although the EU established CBAM with the main purpose of more effectively achieving the EU's emission reduction targets and maintaining fair competition in the local market, and claiming that it is fully in line with the principles and regulations of the World Trade Organization, analyzing the operating rules of the carbon border adjustment mechanism, we believe that the mechanism is essentially a new type of industrial competition in the name of mitigating climate problems"Green Barrier"，是名副其实的"Carbon tariff".
NBD：Do you think the EU will expand the scope of "carbon tariffs" in the future?
Yang Pingjian:现在过渡期的实施细则之下，欧盟要求钢铁、水泥、铝、化肥、电力和氢这六大行业开始申报数据，而在过渡期结束、2026年1月1日完全生效后，就要正式开始征收"Carbon tariff".
In the future, it is very likely that it will not only be these six industries that will be involved in "carbon tariffs". If the covered industries are gradually expanded to be consistent with the EU emissions trading system EU-ETS, it may accelerate the establishment of international green trade barriers and form an international "carbon tariff club".
Industries such as steel will face the burden of increased costs
NBD：After the implementation of CBAM, will it weaken the competitiveness of the export products of relevant enterprises in China?
Yang Pingjian:At present, the overall impact on China's foreign trade is limited, but it has a greater impact on local industries, especially individual export enterprises.
Based on CBAM's cargo coverage, the merchandise trade covered by the mechanism is not particularly large in the EU's total imports from China. However, when it comes to the industries and enterprises within the scope of the mechanism, the situation becomes much more serious.
The EU unit carbon allowance trading price fluctuates around 100 euros / ton, while in China's national carbon trading market, the price is only less than 8 euros, there is a huge difference between the Chinese and European carbon prices, and the products of enterprises participating in domestic carbon trading need to pay part of this huge difference to enter the European market.
Taking the steel industry, for example, steel products are highly carbon-intensive, and because they have not yet been included in the domestic carbon trading market, it is difficult to fully prepare for the carbon emission data reporting obligations that need to be fulfilled in the future. According to the current situation, after entering 2026, Chinese exporters in related industries will face the burden of huge cost increases.
With the continuous evolution of the world's industrial chain and supply chain pattern, the scope of products covered by taxation may continue to expand in the future. Considering China's rapid development of electric vehicle and power battery export momentum in recent years, what needs us to pay more attention to is another major policy of "FIT for 55", that is, the implementation of the EU's new battery law, which may have a significant impact on China's new energy industry chain enterprises.
NBD：How can Chinese companies deal with the potential risks posed by CBAM?
Yang Pingjian:After all, the implementation of relevant mechanisms is the trend of the times in the future, and for enterprises, it is time to plan ahead and make some preparations in advance.
To this end, the first is to use carbon emission reporting as a standard to assess the availability of carbon emission data for exported EU goods, especially for enterprises that are not included in the domestic emissions trading market but are covered by CBAM. These enterprises should establish carbon emission quantification and management mechanisms as soon as possible, and the government should provide guidance and assistance to these enterprises when necessary. Enterprises that are not yet covered by the mechanism should also take precautions and verify the carbon emissions of their products in advance to prevent the mechanism from expanding its scope in the future.
The second is to assess the additional costs that CBAM will bring to enterprises. Enterprises within the scope of application of the mechanism, especially enterprises with a large number of trade with the EU, may need to bear greater upward pressure on costs if they cannot adjust their business strategies in a timely manner according to the new trends of EU policies. These companies should strengthen communication and consultation with EU importers and provide them with carbon emission reports according to their requirements.
The third is to adjust corporate policies as soon as possible according to the rising costs brought by CBAM, explore new overseas markets, and reduce the proportion of goods exported to the EU to control costs.
The fourth is to use this as a driving force to force self-improvement, introduce or develop low-carbon emission production technology, update outdated production equipment, adopt more advanced and environmentally friendly technology, and make products exported to the EU have sufficient price competitiveness.
NBD：In the process of self-improvement of carbon emission reduction, how should enterprises deal with the cost problem, and what actions can the government take in this regard to help enterprises in low-carbon transformation?
Yang Pingjian:Green and low-carbon transformation is an unstoppable world trend. Enterprises are responsible for environmental compliance and carbon emission reduction, and if they wait and see, take chances, and hesitate to act, they will only delay the precious transition window.
At the same time, the government should actively introduce relevant laws, policies and standards, encourage enterprises to take the lead and pilot enterprises through tax incentives, technological transformation incentives and other methods, guide consumers to support enterprises that take the lead, and pay for carbon reduction and consumption reduction invested by enterprises through green premiums.
In addition, government departments should also do a good job in maintaining fair competition in the market, avoid enterprises that do not do well in green and low-carbon or "greenwashing" enterprises from gaining unfair advantages in competition, and prevent the phenomenon of "bad money driving out good money".
Cover image source: Xinhua News Agency
