EU includes Fasteners in ‘CBAM’ plans


EU includes Fasteners in ‘CBAM’ plans

In December European Parliament, Council and Commission agreed plans for the introduction of an EU Carbon Border Adjustment Mechanism. Part of the EU’s ‘Fit for 55’ environmental strategy, from 2026 ‘CBAM’ will require EU importers to purchase CBAM certificates to pay the difference between the carbon cost in the country of production and price of carbon allowances in the EU Emissions Trading System.

Originally, the initial scope of CBAM was expected to focus on primary materials such as steel, aluminium, cement and chemicals. However, intense lobbying by several European trade bodies resulted in the scope being extended to some downstream products, in which steel represents almost all the material content. As well as an extensive range of forged products this means that all steel fasteners falling in Tariff Code heading 7318 will also be in scope.


While purchase of CBAM certificates is not expected to come into force until 2026, EU importers will have to start reporting on the carbon content of in-scope products they bring into the EU market.


This is certain to mean EU importers requiring information on carbon content from their supply chain, including in the UK, which following its exit from the EU is treated as a third country. That process is likely to lead to EU importers re-evaluating their sourcing policies to take account of the eventual cost impact of purchasing CBAM certificates.


The UK Government is understood to be considering a similar CBAM mechanism. However, it appears that it will not begin consulting with industry until well into 2023. Without specific agreement between the UK and EU the risk is that, as a result of Brexit, UK exports will be subject to the CBAM rules as they are phased in – effectively applying an additional import tariff on fasteners and other products shipped from the UK to EU markets.