About one-quarter of global emissions are, to varying degrees, covered by carbon pricing schemes. They’ve raised over $500bn from polluters to date. Andrew Reid at NorthStone Advisers, writing for IEEFA, summarises his report which says the annual amount raised, now almost $100bn, is set to increase with two-thirds of nations planning to use carbon pricing in their Nationally Defined Contributions. And the EU’s Carbon Border Adjustment Mechanism … [Read more...]
The EU’s Carbon Border Adjustment Mechanism still has 5 serious flaws
Taxing carbon at the border is a lot more complicated than you may think, explains James Bushnell at the Energy Institute at Haas. The EU’s Carbon Border Adjustment Mechanism (CBAM) imposes a tax on imported goods that is designed to reflect the carbon content of those goods. But CBAM has flaws that must be addressed. It taxes the carbon in imported inputs supplied to EU producers, but not the carbon of those same inputs if they are imported as … [Read more...]
To make Clean Industry stick, the United States needs new trade mechanisms
The industrial sector throughout the world needs to decarbonise. At the same time, no one country wants to incur the costs and risk losing market share to rivals who decarbonise slowly (or not at all!) Hence the EU’s Carbon Border Adjustment Mechanism (CBAM) that imposes costs on carbon-intense imports. This protects clean EU industries while incentivising importers to get going with decarbonisation or lose their European customers. Allegra Dawes … [Read more...]
Green Steelmakers’ global future: importing the Iron from where Renewables are cheap, the Ore abundant
Governments in Europe have allocated around €5bn to 10 commercial-scale hydrogen-ready DRI (direct reduced iron) facilities for steelmaking, but even with these generous subsidies steelmakers are struggling to reach final investment decisions, citing high costs for domestic hydrogen as a barrier. And when you consider that over €400bn is needed to transition the entire European sector to hydrogen-based steelmaking, a totally new way of thinking … [Read more...]
Why isn’t Methane included in the EU’s Carbon Border Adjustment Mechanism?
Robert Kleinberg at CGEP explains why methane isn’t included in the EU’s Carbon Border Adjustment Mechanism (CBAM) which imposes a carbon tax on imported goods. Basically, CO2 emissions are easy to estimate accurately, whereas methane emissions are not. Many methane emissions, even the largest ones, are intermittent and of highly variable duration. Gas leaks vary over many orders of magnitude, and once diffused in the atmosphere leave no local … [Read more...]
Gulf States are investing in Carbon Capture to maintain Hydrocarbon business
The Gulf region wants to maintain their substantial revenues from hydrocarbons in a decarbonising world. One way to do that is to invest in carbon capture, to make cleaner and more marketable fossil fuel products. Megren Almutairi and Karen Young at CGEP look at their current plans and future prospects. Right now, about 10% of CO2 captured globally is in the industrial facilities of the Gulf States. Their national oil companies boast some of the … [Read more...]
Will EU decarbonisation policies shift the Fertiliser industry into making Ammonia for energy (but outside the EU)?
The EU’s fertiliser industry must face up to the region’s ambitious decarbonisation rules, making its carbon-intensive processes much more costly. But a door of opportunity is also being opened: the industry already produces ammonia which is increasingly being seen as an alternative clean fuel, explains Hyung-Ja de Zeeuw at Rabobank. The problem for EU nations is that it will be cheaper for the industry to relocate and make that ammonia somewhere … [Read more...]
U.S. and EU: vastly different approaches to trade and climate put a transatlantic deal at risk
Uncertainty over the results of this year’s elections in the U.S. and the EU have effectively postponed trade deals between the two blocks. That means when talks restart in 2025 there will be even less time to find the best compromises. As Gautam Jain, Noah Kaufman, Chris Bataille and Sagatom Saha at the Center on Global Energy Policy explain, it’s why this time should be taken to better understand the differences and lay out the possible … [Read more...]
Buying carbon allowances while decarbonising: what’s the best strategy for an EU industrial firm?
EU industrial companies affected by the big changes to their carbon costs that come from the new EU ETS rules and the Carbon Border Adjustment Mechanism (CBAM) must create strategies to deal with them, if they haven’t started already. Otherwise they will fall behind those that have. Pablo Ruiz at Rabobank summarises their analyses and conclusions. Ruiz presents a map for each of the different starting positions. The study looks at the critical … [Read more...]
How much protection from carbon-intensive imports will CBAM give to EU industries?
The EU’s Carbon Border Adjustment Mechanism (CBAM) is not a business-as-usual instrument that allows sectors to delay decarbonisation. It applies a levy on imported goods equal to the internal EU ETS-related carbon price, so that both EU-produced goods and those imported into the EU face similar carbon cost pressures. But sectors must use the CBAM phase-in period to decarbonise. Pablo Ruiz and Barbara Kölbl at Rabobank look at how different … [Read more...]
CBAM is now active. A guide to what companies must do to comply
On October 1st 2023 the Carbon Border Adjustment Mechanism (CBAM) became effective. Its purpose is to limit carbon leakage by establishing a carbon price on imported goods that is equivalent to the carbon price on domestically produced goods. That means introducing a set of reporting and compliance obligations for importers of goods into the EU. Simon Göss and Hendrik Schuldt at carboneer explain the new mechanism and scope (aluminium, cement, … [Read more...]
Carbon Pricing: almost 25% of emissions now covered globally, but coverage and prices must rise further
Despite early scepticism, carbon pricing is making its mark globally. Today almost a quarter of global greenhouse gas (GHG) emissions are covered by a carbon price, compared to just 7% ten years ago. 73 national and sub-national jurisdictions have carbon pricing, explain Joseph Pryor and Venkat Ramana Putti at The World Bank, writing for the Florence School of Regulation and quoting from the World Bank’s State and Trends of Carbon Pricing 2023 … [Read more...]
Industry’s EU ETS reforms and CBAM: how firms can turn the rising cost of carbon into competitive advantage
Changes to the EU ETS mean free emissions allowances (EUAs) for industry will be gradually phased out as the Carbon Border Adjustment Mechanism’s (CBAM) CO2-related levy is inversely phased in. It means the carbon costs for industry in the EU will significantly rise. Pablo Ruiz at Rabobank takes a deep dive to assesses the magnitude of these changes and their implications for the main industrial sectors, and the main change drivers for … [Read more...]
The U.S. should support the EU’s Carbon Border Adjustment Mechanism (CBAM)
The U.S. should get behind Europe’s Carbon Border Adjustment Mechanism (CBAM), says Joseph Majkut at the Center for Strategic and International Studies. Under the EU’s newest agreement, anyone importing CBAM-listed goods into Europe will have to report the emissions associated with their products starting in October, and ultimately face tariffs if those emissions exceed those of the equivalent products made in the EU. The current list is iron and … [Read more...]
EU ETS and CBAM: what the big update to emissions trading rules means for Europe’s key sectors
The EU’s Emissions Trading Scheme is a vital part of the region’s decarbonisation plans. Simon Göss at carboneer digs into the new rules coming in for the existing EU ETS, and the implementation of the new carbon border adjustment mechanism (CBAM). Right now, the existing EU ETS covers around 40% of the EU’s emissions (energy sector, industrial installations and aviation). Its scope is being extended to include maritime transport. On top of that, … [Read more...]
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