Episode 1094: Think Tank: COP28 flags need for regulatory tools such as CBAM

With COP28 pushing climate change up the news agenda, we untangle the mysteries of the EU’s Carbon Border Adjustment Mechanism (CBAM) and explain what it means for chemicals and fertilisers. 

-          CBAM puts price on carbon for imports to Europe

-          Potential cost of €3.2bn for fertiliser importers, based on 2022 imports, prices

-          Covers iron, steel, aluminium, fertilisers, electricity, hydrogen

-          Price will be same as existing European Trading System (ETS)

-          Importers will pay for the cost of carbon

-          Transitional reporting ends 2025, charging phased in 2026-2034 (2.5%-100%)

-          Designed to ensure level playing field for imports and local production

-          Chemicals get around 75% free allowances for CO2

-          Could fall to zero if chemicals added to CBAM likely after 2030

-          EU allowance currently €75-80/tonne

-          European Commission aims for all imports to be covered by CBAM