CBAM and Chinese Export Enterprises: Challenges and Opportunities in Responding to Carbon Tariffs

CBAM is referred to by the market as a carbon tariff, although strictly speaking CBAM is not a tariff, this concept can be borrowed to understand and discuss CBAM. How should Chinese export enterprises view CBAM and adjust their low-carbon actions to meet this challenge?

The European Parliament and the European Council passed the CBAM bill on April 18, 2023 and April 25, 2023 respectively, aiming to help the EU achieve its 2030 climate goals and prevent carbon leakage. CBAM is one of the key legislations of the Fit for 55 plan.

CBAMs core logic determines the number of CBAM certificates required based on the embedded emissions of imported goods. Each ton of embedded emissions corresponds to one CBAM certificate. CBAM certificate prices are calculated by the European Commission based on average carbon allowance auction platform prices.

The total CBAM payment can be calculated as: Total CBAM payment = Embedded emissions (tons) × CBAM certificate price. However, companies can make adjustments based on paid carbon costs and EU free allowances to reduce the total CBAM payment.

CBAM and similar policies in other countries indicate carbon tariffs may become important factors affecting international trade. Chinese exporters may face increased costs and reduced competitiveness without countermeasures. However, CBAM and CCA provide a window for Chinese exporters to understand and adapt to future international carbon markets and trade changes.

Chinese exporters should thoroughly understand CBAMs system and calculation logic, taking corresponding low-carbon actions to reduce emissions and prepare for potential carbon tariff policies. Companies can reduce CBAM costs by deducting carbon allowances and paid carbon costs, while finding EU-recognized methods to prove carbon cost payments. Understanding and responding to CBAM will provide Chinese exporters important opportunities to maintain competitive advantages in future international trade.