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On the evening of March 15, after a long preparation, the EU carbon tariff (Carbon Border Adjustment Mechanism, CBAM) proposal was approved by the EU Council
.
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
EU carbon tariffs are about to come true
EU carbon tariffs are about to come trueOn March 15, at the meeting of the Economic and Financial Affairs Committee of the European Council, the finance ministers of the 27 EU countries adopted the carbon tariff proposal of France, which holds the rotating presidency of the European Council
.
However, the three thorny issues of CBAM will be left to be resolved later
The EU carbon tariff legislative process has not yet been completed, but after the European Commission, the EU Council has also formed its own carbon tariff plan, which is a key step in the realization of CBAM
.
The European Parliament's plan is expected to be finalized in July this year, and then it will enter the tripartite consultation stage to get the final legal text
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 Boston Consulting Group said in its latest research report 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 impact of increased costs
EU carbon prices plummet over the same period
EU carbon prices plummet over the same periodWhile the EU Council was discussing CBAM, the European carbon market was fluctuating due to geopolitical factors
.
The European energy market has changed significantly as the EU wants to get rid of two-thirds of Russian energy by 2023
Since February 24, the international oil price has continued to hit a record high, and the prices of natural gas, coal, electricity and other energy sources have also continued to rise, but the EU carbon price has plummeted
.
The UK carbon price fell below €100/t in the last week of February
Carbon market prices in other regions also fell
.
In the first week of March, spot prices for Australian federal carbon credits fell 18% from the end of January
The British "Guardian" pointed out that the weak carbon market has directly lowered the cost of carbon emissions for companies, and investors seem to be accelerating their withdrawal from the market
.
Refinitiv pointed out that the sharp rise in commodity prices has affected the cash flow of some industrial companies, which have been forced to sell carbon emission allowance permits due to concerns about the European economy to stop losses as soon as possible, while putting more funds into place.
European carbon prices remain bullish in the long term
European carbon prices remain bullish in the long term As a cap-and-trade mechanism, the EU carbon price directly reflects the level of carbon emission demand
.
The carbon market, the cornerstone of EU climate policy, aims to curb the scale of emissions from energy-intensive industries such as heavy industry and electricity
.
Industry insiders believe that in the long run, expectations for a recovery in EU carbon prices are still strong
.
However, due to the still uncertain geopolitical situation and the severe shortage of natural gas, the European region has to seek coal power generation, which directly increases carbon emissions, thereby raising the demand for carbon emission allowances
.
On the other hand, the current annual reduction in EU carbon emission allowances is 2.
2%
.
If this ratio is increased, the total supply of carbon emission allowances will inevitably shrink, which will also promote the recovery of carbon prices
.
In general, the long-term upward trend of carbon prices is obvious
.
In addition, the EU climate package, including carbon tariffs, is highly likely to pass
.
Market participants expect the EU to remain firm in its decarbonization plan
.
China Merchants Securities said that the decarbonization of Europe will only exceed expectations, not less than expected
.
According to current estimates, by the end of 2030, European greenhouse gas emissions will be reduced by 55% compared with 1990, which will undoubtedly further promote the purchase of carbon emission allowances
.
Aside from some current short-term uncertainties, the EU's green energy transition policy will still support the rise in carbon prices to a certain extent
.
