The analysis addressed steps aimed at expanding the scope of the mechanism and making its implementation more effective. It was emphasized that the main objective of CBAM is to reduce the risk of “carbon leakage” arising from the relocation of production to countries outside the European Union with lower climate standards.
Under the proposed revision, the mechanism is planned to be expanded beyond basic products to also cover goods in the downstream stages of the production chain. In addition, new measures to prevent circumvention of the system and regulations to encourage decarbonization in electricity imports are also on the agenda.
The impact assessment highlighted three main problem areas. First, it was noted that increasing carbon costs could lead to the relocation of production of more complex and higher value-added sub-sector products outside the EU. Second, attention was drawn to attempts to avoid CBAM obligations through misclassification or underreporting of goods. The third issue identified was that the use of default emission values based on fossil fuels in the current system for electricity imports limits incentives for the transition to renewable energy.
The analysis also included the proposed policy mix to address these issues. Accordingly, a balanced expansion of scope is recommended for sub-sector products that pose climate risks, while targeted measures such as including aluminum and steel scrap within the scope are planned to prevent circumvention of the system. For electricity imports, it is envisaged to update emission factors and implement regulations that facilitate the reporting of actual emissions.
The assessment stated that the economic impacts of these changes are expected to remain limited. While a slight decrease in the EU’s total imports is anticipated, macroeconomic effects are projected to remain minimal. The impact on consumer prices is expected to be quite low, particularly in the construction sector, and is not anticipated to create significant pressure on employment. In terms of competitiveness, the proposed regulations are expected to provide a generally small but positive contribution.
Nevertheless, the analysis also identified certain limitations. It was noted that the lack of publicly available detailed data on sub-sectors constitutes a significant shortcoming, and given that CBAM has not yet fully entered the implementation phase, many of the assessments are based on forward-looking risks rather than the current situation. This indicates that the findings presented in the analysis are largely predictive in nature.
Comments
No comment yet.