Monitoring EU scrap trade is a step toward closing loopholes in CBAM – expert

By activating the customs surveillance system to monitor imports and exports of scrap, the EC has taken a step towards closing one of the biggest loopholes in CBAM. This opinion was expressed by CBAM expert David Cruz.

As the expert noted, this may look like a trade measure, but it has real implications for the future cross-border carbon adjustment mechanism.

Scrap (CN 7204, 7404, 7602) is currently not covered by CBAM, he explained. However, the wording of the European action plan on steel and metals suggests that goods made from these raw materials may be included in future extensions of the mechanism, which are planned for the end of this year.

In addition, “melting and casting” and origin declarations may soon be required, especially for goods re-imported into the bloc after processing abroad.

The fight against CBAM circumvention is also in focus. The monitoring system is aimed at the movement of resources when scrap originating in the EU is exported, processed elsewhere, and returned without a carbon price.

This is not yet a mandatory requirement of the mechanism, the expert notes, but it could form the basis for closing the loop.

Last week, the European Commission announced the start of monitoring imports and exports of scrap, including ferrous scrap, aluminum, and copper. This was in response to alarming signals from the steel industry about a growing shortage of raw materials and the potential threat of a shutdown of blast furnace and electric arc furnace capacities.