More recently, the eu has issued intensive legislative proposals and implementing regulations for carbon border regulation mechanisms (cbam, also known as “carbon tariffs”), including the setting of default values for carbon emission intensity and plans to expand product coverage. Under the eu adjustment programme, the carbon border regulation mechanism will be extended from previously identified basic materials such as aluminium, cement, electricity and steel to downstream products such as steel aluminium, with the addition of 180 new downstream products, including machinery, hardware and metal products, vehicle parts, household appliances such as washing machines and construction equipment. This new change implies additional carbon costs for future exports to the eu of products such as automobiles, domestic electricity, etc。
Direct and significant impact
The impact of cbam expansion on china's export-related enterprises is direct and significant。
In recent days, the press spokesman of the ministry of commerce, on issues related to the european union carbon border regulation mechanism, stated that the european side had ignored china’s enormous achievements in green low-carbon development, set a significantly high base default value on the carbon intensity of chinese products and would increase over the next three years, which was inconsistent with china’s current real level and future trends and constituted unfair and discriminatory treatment of china. The european approach is not only suspected of violating the principles of “most-favoured-nation treatment” and “national treatment” of the world trade organization, but also the principle of “common but differentiated responsibilities” established by the united nations framework convention on climate change。
Professor song wei of the institute of international relations of the beijing foreign language university noted that the most obvious for medium-sized enterprises was the change in the cost structure and that importers were required to purchase certificates of implied carbon emissions for products, which necessarily led to a significant increase in export costs。
The relative erosion of market competitiveness is another major effect. “increased costs directly reduce china's price advantage in exports of products such as the `new three', and market shares are at risk of being squeezed.” song wei。
We need a multipronged response
In the face of the expansion of the cbam, chinese exporting enterprises need a multipronged approach. The experts made the following recommendations on how to structure a systematic response。
Supply chain synergy is a top priority, and enterprises need to establish supplier carbon data-sharing mechanisms, optimize raw materials procurement strategies, select low-carbon raw materials suppliers and promote digital upgrading of the supply chain to achieve real-time monitoring of the procurement chain and supply chain。
Low-carbon technology transformation is a core initiative. Enterprises should accelerate green power substitution, innovation in production processes, improvement of product energy efficiency and rapid innovation and transformation of low-carbon technologies。
Market diversification is key to spreading risk. While continuing to cultivate the eu market, enterprises should actively expand emerging markets such as south-east asia and the middle east and reduce their dependence on the single market. At present, a number of domestic enterprises have begun to implement this strategy。
Establishment of a systematic management system
In the long term, chinese enterprises need to be prepared to meet the cbam challenge at multiple levels. Establishing systematic carbon management systems becomes a task for enterprises. This requires enterprises to integrate multisectoral resources such as logistics, supply chains, production, carbon management and the establishment of cross-sectoral collaborative mechanisms and clear data management processes。
Participation in international rule-making is an important way to enhance voice. Song wei stated that enterprises should be actively involved in the development of international carbon accounting standards in order to gain a say in the rules, and that building a green brand image would become a new competitiveness for enterprises, leading to a low-carbon energy transformation and enhancing green competitiveness。
For chinese enterprises, cbam is no longer just a trade compliance issue that needs to be addressed; it is pushing for a comprehensive green revolution from supply chain synergy to production technology. Only enterprises that have taken the lead in completing the low-carbon transition and establishing transparent carbon data management systems can take the lead in this global green competition。
