EU steel sector calls for strict carbon pricing rules in third countries according to CBAM

The European Commission has published a report on the draft implementation act on carbon prices paid in third countries as part of the final stage of the Carbon Boundary Adjustment Mechanism (CBAM).

The consultation gathered feedback from industry stakeholders, governments, and companies on how foreign carbon pricing systems should be recognized under CBAM.

The steel sector supports the recognition of reliable foreign ETS systems

Stakeholders have generally supported the recognition of credible foreign carbon pricing systems, in particular mechanisms such as the UK Emissions Trading System (UK ETS) and China's ETS.

However, many steel sector respondents emphasized that only explicit, verifiable, and effectively paid carbon costs should be eligible for deductions from CBAM obligations.

Stakeholders in the EU steel industry argued that indirect subsidies, hidden offsets, and taxes energy costs should not be recognized as deductible carbon costs according to CBAM. According to the respondents, the assumption of wide deductions can weaken the environmental integrity of the mechanism and distort competitiveness.

Preventing double charging remains a serious problem

Steel manufacturers have strongly emphasized the need to avoid "double charging" within CBAM.

Industry participants argued that carbon costs already paid under third-country emissions trading systems should be fully recognized to prevent carbon leakage.