Insight
The EU’s carbon border tax: aluminium trade at risk, steel sheltered
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
The EU Commission is set to propose a carbon border adjustment mechanism in June. In metals, steel and aluminium are the top two carbon emitters. These industries must decarbonise if the world is going to reach a 2-degree warming scenario. So will the “border tax” clean them up? Working with our sister company, Verisk Maplecroft, we outline how the CBAM will meet the EU’s trade and climate objectives. And we use Wood Mackenzie’s Emissions Benchmarking Tool to assess the outlook on aluminium and steel.
Table of contents
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Executive summary
- Aluminium trade disrupted, but no change for steel trade
- A CBAM will bring higher prices and help to reduce domestic carbon emissions, but an EU CBAM alone will not lower global emissions
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The CBAM
- CBAM to marry EU’s trade and climate objectives
- Levelling the playing field
- Making the CBAM WTO compliant
- CBAM faces resistance from key trade partners
- Logistical nightmare with many potential issues
- CBAM to cover scope 1 and 2 (probably not scope 3) emissions
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The Metals
- Steel and aluminium: metals’ top two carbon emitters globally
- Why is aluminium carbon intensive?
- Why is steel carbon intensive?
- How is the EU positioned on these commodities?
- Steel has been subject to the EU ETS for over a decade – has it worked?
- The aluminium industry has been excluded from the first three phases of the EU ETS
- The CBAM could disrupt aluminium trade flows
- but may not impact steel trade
- 2 more item(s)...
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The forecast
- How will the CBAM affect aluminium and steel?
- A CBAM will bring higher prices and help to reduce domestic carbon emissions
- but an EU CBAM alone will not lower global emissions
Tables and charts
This report includes the following images and tables:
- Aluminium and steel proportion of global total emissions 2020
- Aluminium and steel proportion of global total emissions 2020 (tonne CO2e/tonne product)
- How have EU steelmakers escaped the ETS?
- Emission intensities for EU and all other countries that send aluminium products to the EU
- EU hot-rolled coil imports, emissions and margins
- 2020 scope 2 proportion of emissions by product
- 2019 import value by product
What's included
This report contains:
