The European Steel Association (EUROFER) has stated that the Carbon Border Adjustment Mechanism (CBAM) is full of loopholes and, if not fixed, it would undermine decarbonization investments, accelerate deindustrialization, favor production in third countries, and fail to cut global emissions. The association stated that the green transition efforts of the European steel industry are at risk of being undermined due to cheap and carbon-intensive imports.
Noting that 70 percent of EU steel exports go to countries with no carbon pricing, EUROFER highlighted that the lack of a solution to preserve exports is a major loophole that has a negative impact not only on competitiveness but also on climate because EU exports will be displaced by more carbon-intensive products.
To strengthen the effectiveness of the CBAM and close the loopholes, the EUROFER stated that free allocation for exports should continue to avoid carbon leakage in global markets; resource shuffling should be prevented; the CBAM must be extended to steel-intensive downstream goods; grade 304 that has higher emissions must be fixed for stainless steel; indirect cost compensation for steelmaking should be maintained and indirect emissions for ferroalloys must be included in the CBAM; the origin of CBAM goods must be set where the steel was melted and poured; the inward processing procedure should be ended to avoid a major environmental loophole; and free allocation benchmarks for long products and stainless steel need to reflect the most climate-friendly practices.