Heavy: EU carbon tariffs get preliminary approval in European Council

On the evening of March 15, the EU carbon tariff (Carbon Border Adjustment Mechanism, CBAM) was approved by the EU Council
.
French President Emmanuel Macron announced the news on his personal social account
.
As the world's first proposal to address climate change in the form of a carbon tariff, it will have a profound impact on global trade
.

It is reported that at the meeting of the Economic and Financial Affairs Committee of the European Council (ECOFIN) on the 15th, the finance ministers of the 27 EU countries adopted the carbon tariff proposal of France, the rotating presidency of the European Council
.
This means that European countries support carbon tariff measures
.

The European Council, advocated by France, adopted a solution that shelved the dispute - leaving the three most controversial issues of CBAM to be resolved later: 1.
The withdrawal schedule of the free emission allowances obtained by the EU industry, and 2.
the revenue distribution of CBAM.
Scheme, 3.
"tax rebate" of carbon cost of EU export products
.
It can be seen that France, as the rotating presidency of the European Council, is eager to promote the completion of the CBAM legislation
.
Some analysts believe that France hopes to push EU countries to reach a compromise on CBAM within the European Council before the general election in April and form a unanimous position
.
Removing the three contentious issues mentioned above would be very helpful in reaching consensus within the European Council
.

This "Chairman's Text" does not change the CBAM proposal proposed by the European Commission in other respects: the product scope is still limited to cement, electricity, fertilizer, steel and aluminum; only the "explicit carbon price" of exporting countries (which can be deducted carbon tariffs); only direct emissions are taxed; carbon tariffs are implemented by EU member states (there is no unified executive body at the European Commission level)
.

This progress does not mean that the EU carbon tariff has gone through the legislative process
.
It means that after the European Commission, the European Council has also formed its own carbon tariff scheme
.
The European Parliament's plan is expected to be finalized in July this year
.
Then it enters the tripartite negotiation stage to get the final legal text
.

Impact on our country

Analysts pointed out that the EU carbon tariff policy is expected to be implemented from 2023, which will bring major challenges to companies with high greenhouse gas emissions
.
The latest research report from Boston Consulting Group (BCG) conducted an in-depth analysis of the economic impact of EU carbon tariffs on key industries, and found that the impact of carbon tariffs on industry profits can be as high as 40%, and companies in the entire industry chain will feel the cost increase.
Impact
.
Carbon tariffs could also change the competitive advantage of companies exporting to the EU
.

Taking the steel industry as an example, Chinese steel companies have to pay high carbon tariffs when exporting to the EU because of their high carbon emissions.
Compared with steel companies with higher carbon efficiency in other countries, the cost advantage of China's export of steel will be reduced
.
In addition, the European Union now requires companies to assess, report, and calculate the carbon footprint cost of their products, and the EU may soon impose the same requirements on companies exporting products to Europe amid doubling global pressure to reduce emissions
.
In the context of the global low-carbon transition, Chinese companies should respond positively and consolidate their market competitiveness
.

Statistics show that China's energy structure, "rich in coal, poor in oil, and less in gas", is now the world's largest energy consumer.
In 2020, the energy consumption will be equivalent to nearly 5 billion tons of standard coal, and the carbon emissions will be nearly 10 billion tons.
It is also the world's largest energy consumption country.
China is the largest carbon emitter in the world, accounting for about 28% of the world's carbon emissions.
Our carbon emissions exceed the sum of the emissions of the three major economies of "US + EU + Japan", which is about 2 times that of the US and 3 times that of the EU
.
China's special envoy for climate change, Xie Zhenhua, recently pointed out that China's coal consumption still accounts for more than 50% of the total.
China's energy consumption per unit of GDP is 1.
4 times that of the world average and 2.
1 times that of developed countries, while China's carbon emission intensity per unit of energy is the world average.
1.
3 times
.

On the other hand, it is good for China's new energy industry, especially photovoltaic and wind power products
.
According to SolarPower Europe’s latest report, EU Solar Market Outlook 2021-2025, 2021 will be another record year for the European solar industry
.
In 2021, the EU estimates that 25.
9 GW of new PV capacity will be connected to the grid, up 34% from 19.
3 GW in 2020 and breaking the record of 21.
4 GW in a decade
.

According to institutional data, as the world's largest new energy R&D and manufacturing power, China will export 40.
9GW of modules to the European market in 2021, a year-on-year increase of 54% compared with 26.
7GW in the previous year
.
Benefiting from the trend of energy transition, Europe continues to maintain the largest module import market, accounting for 46% of the global market
.
The main countries include the Netherlands, Spain, Greece, Portugal, Poland and Germany, all of which have reached GW-level imports.
The Netherlands is China's largest exporter, with a total annual volume of 23.
8GW
.

Compared with traditional energy sources, photovoltaic, wind power, and hydrogen energy are all secondary energy sources, which are not affected by materials, space, and resources, and because photovoltaic and wind power are already economical, especially in Europe, people of various countries use new energy sources.
Willingness is high
.

On March 8, SolarPower Europe's official website released information entitled "RePower EU with Solar: The 1TW EU Solar Pathway for 2030", showing that Frans Timmermans, Vice President of the European Commission, proposed an energy strategy aimed at connecting Europe with Russia as soon as possible.
Separating natural gas while protecting citizens from painful and growing energy price shocks, Europe will have 1 TW of solar capacity by 2030
.
Previously, the "2021-2025 European Photovoltaic Market Outlook" released by Solar Power Europe showed that by the end of 2021, the cumulative installed photovoltaic capacity in Europe was 164.
9 GW
.
If the European carbon tax is fully passed, the 1TW target will be achieved
.