Display mode (Doesn't show in master page preview)

21 Dec 2022

International Economy

EU plans to implement CBAM October 1, 2023 (Business Brief No.3983)


        From October 1, 2023 onwards, the CBAM will initially apply to targeted industries – cement, electricity, fertilizers, iron and steel, aluminum and hydrogen, including those with indirect emissions and some downstream products such as screws and bolts. The obligations for importers of non-EU countries’ products with prices higher than EUR 150 in the targeted industries will be limited to reporting CO2 emissions generated in the production of products imported to the EU, not yet being required to pay carbon tax. This will allow them to make their adjustments during the transition period. Such reports must be submitted on a quarterly basis, consisting of (1) volume of imported goods, (2) amount of CO2 emissions, and (3) carbon price paid by the countries of imported goods (if any).

        By 2025, following the implementation of its CBAM, the EU will assess the progress and outcome based on data obtained during the green transition before considering enforcement of carbon tax from 2026 onwards. The tax rates will be based on average weekly prices in the EU Emission Trading System (ETS). In addition, the CBAM will likely be expanded to other sectors covered by the ETS such as basic organic chemicals, plastics and polymers, glass, ceramics, gypsum, paper, etc. in the coming years. The role of the EU ETS will be phased out and eventually ended by 2034.

        However, even though EU are not the main market for Thai exporters of products under the CBAM’s targeted industries, they should accelerate their adjustments to comply with such measures in order to maintain their customer base in the EU. They may enjoy an opportunity for market expansion if other countries’ exporters fail to make adjustments to keep pace with this development. Additionally, this effort is a preparation for potential implementation of measures in other countries similar to those of EU. For instance, the US is considering the US Clean Competition Act and may start to levy a carbon tax by 2026 as well.

View full article

International Economy