Europe’s proposed CBA for CO2 emissions reduction

16 March 2020

ArcelorMittal calls for member states and MEPs to support the introduction of a carbon border adjustment (CBA), as part of the European Commission’s €1 trillion Green Deal, aimed at making the bloc carbon neutral by 2050. 

In a manifesto published recently, ‘Creating a low carbon world, the case for a Carbon Border Adjustment’, ArcelorMittal sets out its firm belief that a CBA should be one of the first Green Deal measures adopted by the new European Commission, as it will help to create the market conditions and protections needed for companies to make investments and transition to carbon neutrality without disruption.

Currently, within the EU, energy-intensive industries including steel producers, pay a carbon cost under the EU Emissions Trading System (ETS). But this does not apply to steel producers from markets outside the EU who can sell steel with comparable or often significantly higher, carbon emissions, at a lower price. The result is that steel production is moving to non-EU countries where carbon emissions legislation is often less strict, undermining efforts to combat climate change.

However, with a CBA, when steel comes into the EU, the carbon costs that European producers pay would be added to the imported steel, equalising the cost of carbon for every producer to create a fair market and, crucially, encouraging investment in lower-emissions steel production.

ArcelorMittal believes that a CBA can be applied in various ways, as long as it neutralizes the disparities in carbon costs between domestic products and imports, and incentivizes the transition to low carbon steel production.