Originally from the official website of the European Commission, and copyright belongs to the European Commission

The Annex I (Cement, Fertilizers and Electricity) lists the calculations of goods' embedded emissions, including direct and indirect emission. For goods listed in Annex II (Steel and Iron, Aluminum, and Hydrogen), only direct emissions need to be calculated, whose indirect emissions might be included in the future.

CBAM is a carbon border adjustment mechanism launched by the European Union in response to "carbon leakage". It aims to prevent enterprises from migrating a large amount of carbon emission activities and behaviors to non-EU regions due to differences in carbon emission prices between EU and non-EU regions. On the other hand, the EU's CBAM costs nominally address the issue of "carbon leakage", but actually treats imported goods differently and transfers the cost of carbon reduction to developing countries with concentrated production and manufacturing enterprises.

The implementation of CBAM Regulation will first have an impact on exporters that rely on exporting high-carbon products. Shanghai Baosteel Group, the largest listed steel company in China, made the following prediction in its 2021 Climate Action Report: "The European Commission has announced the launch of the world's first carbon fee plan, which will impose fees on imported carbon products, including steel and iron, cement, fertilizers, and aluminum. This move will affect our future product exports. At 80 euros per ton of carbon dioxide, we estimate that a CBAM cost of 40 to 80 million euros per year will be charged.

According to a World Bank research report, if CBAM costs are fully implemented, Chinese manufacturing industry may face an average additional cost of 26% in the international market, resulting in a 21% decline in export volume.

Enterprises should collect data from suppliers, installations should regularly monitor and report relevant data in accordance with the regulation, otherwise importers will be fined.

（1）For exporters: Compliance & Decarbonization

（2）For importers: Compliance & Reducing costs

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