Japan’s steelmakers have comments on European CBAM

The European CBAM faces objections from the steel industry outside the EU, in particular, it has a number of comments from Japanese steelmakers. SteelMint informs about it.

The Japan Steel Federation (JSF) has pointed out certain problems with CBAM. In particular, the JSF noted that the mechanism requires importers to provide data that is not required by EU steel producers, and this unfairly puts imported goods at a disadvantage. In addition, the federation points out that the system requires reporting on the proportion of steel scrap and ferroalloys used in the production of products that have nothing to do with measures taken to prevent global warming.

As it was reported previously, Japanese steelmakers were also concerned about the complexity of the draft report presented by the European Commission. Some clauses also require the disclosure of certain technical information, raising concerns about the need for such detail.

If the reporting system is implemented as proposed, it could have a significant impact on steel exports from Japan to the EU, which currently account for more than 5% of the country’s total exports, with a volume of approximately 1.85 million tons per year.

Steel groups in other countries, such as South Korea, India, Turkiye and Argentina, also have concerns about CBAM. They claim that the mechanism violates the rules of the World Trade Organization, puts imported goods at a disadvantage compared to European producers.

As GMK Center reported earlier, in April 2023, the European Parliament approved five legislative acts from the Fit for 55 package, which aims to reduce greenhouse gas emissions by 55% by 2030 (compared to the level of 1990), in particular, the CBAM mechanism. It will be applied from October 1, 2023, with a transition period when the importer’s obligations will be limited to reporting. The implementation of the mechanism will take place gradually, at the same pace as the gradual abandonment of free allowances in the ETS (2026-2034 years).

Also, European steelmakers are worried about terms of transition to CBAM, one of the problems they cite is insufficient capacity to supply renewable energy. At the same time, South Korean steel producers urged the government to persuade the EU to allow the use of domestic methods for calculating carbon emissions for a longer period before the mechanism is fully implemented, and India is asking the EU to recognize its own scheme of carbon credit trading (CCTS).