Muammer Bilgiç stated that the financial burden of the Carbon Border Adjustment Mechanism (CBAM), which had previously only been estimated, has now started to take on a more concrete form with the steel benchmark values announced at the beginning of the year, the free allocation rates to be phased out according to a set schedule, and the continuously fluctuating carbon certificate prices. He noted that the main issue is not that EAF-based producers who have not completed the verification process will face very high CBAM costs in the initial reactions reflected to the public. Verification, he emphasized, is a temporary issue tied to time, whereas the announced benchmark values are important in indicating the scale of the problem.
EU benchmark values and the state of the sector
Bilgiç pointed out that the European Commission announced Scope 1 direct emission benchmark values based on the top 10% of the EU steel sector: “1.364–1.491 for BF&BOF, 0.475–0.567 for DRI EAF, and 0.066–0.141 tCO₂ per ton of rolled product for scrap-based EAF (varying depending on product type). Specifically, for our two most important products, the values are 0.072 tCO₂ per ton of steel for HRC, and 0.066 tCO₂ per ton of steel for construction steel and wire rod. These will be the reference values against which we will be compared once verification bodies are appointed and our actual data is revealed.”
Sharing known sector values, Bilgiç added: “According to sustainability reports, emissions are around 2.2–2.5 tCO₂ per ton for BF&BOF, and a minimum of 0.14–0.17 tCO₂ per ton of steel for EAF HRC and rebar. While some reports clearly state that these values are verified on a rolled product basis in compliance with ISO 14064-1, others do not provide this critical detail.”
Challenges will grow with Scope 2
Bilgiç stressed that challenges will increase with the anticipated introduction of Scope 2: “For EAFs, the combined Scope 1+2 benchmark value for HRC is 0.237 tCO₂ per ton of steel. However, according to sustainability reports, our lowest-emission producer stands at 0.340 tCO₂ per ton. While the EU grid emission average is 202 g CO₂/kWh, it is around 478 g CO₂/kWh in our country. Given that our EAF-based sector operates at nearly twice the EU Scope 1 benchmark and grid emission levels, and our integrated steel sector exceeds them by about 1 tCO₂ per ton of steel, it is a critical question how competitive these sectors can remain once this additional cost burden is imposed, especially when they are already struggling to compete.”
Financial burden and sample calculations
Bilgiç illustrated the financial burden with examples: “For instance, for an exporter with Scope 1 emissions of 0.15 tons of CO₂ per ton of rolled product, assuming a certificate price of USD 98 per ton, exporting 1 million tons of sheet would result in a CBAM cost of USD 191,000 in 2026, USD 382,000 in 2027, and USD 3.7 million by 2030. These figures may have different implications depending on the producer and competitive conditions, but once Scope 2 is included, this amount could increase by approximately 4–5 times.”
Decarbonization is a measure of efficiency
Emphasizing that CBAM is not only a financial burden but also a risk in terms of efficiency, Bilgiç said: “Decarbonization is a measure of efficiency. Falling behind in this area means not only exceeding emission benchmarks but also lagging in efficiency. The value chain that purchases products from domestic producers with such emission levels and transforms them into other products for export to the EU will also be affected by this actual situation and benchmark comparison.”
Energy and grid emissions are critical
Finally, Bilgiç highlighted the importance of grid emissions: “There is still time to transform in terms of Scope 1, benchmarks can be approached, and the financial impact is currently manageable. However, for Scope 2, it will be a long journey with high costs, and most importantly, decision-makers must recognize grid emissions as a problem and incorporate it into energy policies as a new dimension. The issue of grid emissions is not only a problem for steel but for all sectors. The solution lies in increasing renewable electricity generation and phasing out fossil fuels. This transition could enhance our competitiveness by enabling an energy system with near-zero marginal cost to dominate both industry and social life.”
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