EU Carbon Tariff CBAM — Impact on Chinese Export Enterprises and Response Strategies
What is CBAM (Carbon Border Adjustment Mechanism)?
CBAM (Carbon Border Adjustment Mechanism), commonly known as the "carbon tariff," is the EU's core policy tool for achieving its "Fit for 55" climate targets. Its essence is to levy a carbon cost equivalent to the EU Emissions Trading System (EU ETS) carbon price on high-carbon-emission products imported into the EU, preventing "carbon leakage" — where enterprises relocate production to regions with looser climate policies to avoid EU carbon costs.
CBAM Covered Industries and Product List
| Industry | Specific Products | CBAM Transitional Period (2023-2025) | Formal Levy Period (2026-2034) |
|---|---|---|---|
| Steel | Crude steel, steel products, ferroalloys | Report emissions data only, no payment | Gradual carbon tariff levy, full coverage by 2034 |
| Aluminum | Primary aluminum, aluminum products | Report emissions data only | Same as above |
| Cement | Cement clinker, various cements | Report emissions data only | Same as above |
| Fertilizers | Nitrogen fertilizers, compound fertilizers | Report emissions data only | Same as above |
| Electricity | Imported electricity | Report emissions data only | Same as above |
| Hydrogen | Green hydrogen, grey hydrogen, blue hydrogen | Report emissions data only | Same as above |
| Expanded Scope | Organic chemicals, polymers | 2026 assessment for inclusion | TBD |
CBAM Carbon Price Mechanism and Chinese Enterprise Cost Estimation
Carbon Price Linkage Method
CBAM certificate prices are linked to the weekly average auction price of EU Allowances (EUA). In 2025, EUA prices fluctuated between 65-85 EUR/tonne CO2. Taking steel products as an example, Chinese blast furnace steelmaking produces approximately 1.8-2.2 tonnes CO2 per tonne of steel. At 75 EUR/tonne, the CBAM cost per tonne of steel would be approximately 135-165 EUR — equivalent to 15%-20% of current steel export prices.
Chinese Steel Export Carbon Cost Estimation
| Product Type | Carbon Emissions per Tonne (Estimated) | CBAM Cost at 75 EUR EUA | Percentage of Export Price |
|---|---|---|---|
| Hot Rolled Coil | 2.0 tonnes | 150 EUR | 18% |
| Cold Rolled Sheet | 2.2 tonnes | 165 EUR | 16% |
| Galvanized Sheet | 2.3 tonnes | 173 EUR | 17% |
| Rebar | 1.9 tonnes | 143 EUR | 22% |
Practical Pathways for Chinese Enterprises to Address CBAM
Short Term (2025-2026)
- Establish product carbon footprint accounting systems and register in the CBAM transitional period registry system
- Communicate with EU importers to clarify data reporting responsibilities and cost sharing
Medium Term (2027-2030)
- Promote electric arc furnace short-process steelmaking substitution to reduce carbon emissions per tonne of steel
- Procure green electricity and increase scrap steel utilization rates, potentially reducing emission factors by 30%-40%
- Consider deploying processing capacity in the EU or neighboring regions
Long-Term Strategy
- Transform toward high-value-added low-carbon products (such as automotive high-strength steel)
- Explore carbon capture, utilization and storage (CCUS) technologies
- Participate in China's carbon market trading to accumulate carbon asset management experience
GreenArk (Shenzhen) Certification Co., Ltd. provides enterprises with CBAM compliance consulting, carbon footprint accounting, EU ETS carbon price tracking, and export cost estimation services, helping enterprises accurately assess carbon tariff impacts and formulate response plans.
FAQ
Q: Does the CBAM transitional period require payment of carbon tariffs?
A: No. During the transitional period (2023-2025), importers only need to report the embedded carbon emissions of imported products quarterly, without purchasing CBAM certificates. Formal levies begin in 2026.
Q: Chinese steel enterprises already pay carbon prices in the domestic carbon market. Can CBAM be offset?
A: Yes. CBAM allows deduction of effective carbon prices already paid in the producing country. China's carbon market currently covers the power industry only; steel is not yet included (expected to be included in 2026-2027). Therefore, at the current stage, the deductible carbon price for Chinese steel products is zero.
Q: What if SMEs lack carbon accounting capabilities?
A: EU-provided default values can be used, but default values are typically higher than actual emissions, resulting in higher CBAM burdens. It is recommended to engage professional institutions like GreenArk for carbon footprint accounting, substituting actual data for default values to reduce costs.
GreenArk (Shenzhen) Certification Co., Ltd.
www.greenark-sz.com
