The EU Climate Plan to Hurt Europe’s Heavy Industry

The European Commission has presented the EU Green Deal environmental plan, which aims to reduce emissions by 55%.

First, a cross-border carbon duty (Carbon Border Adjustment Mechanism (CBAM)) will be introduced to restrict imports of steel, aluminum, cement, fertilizers, and electricity to the EU.
The scheme will be launched in test mode from January 1, 2023, and importers will receive a 3-year preparation period – finally, the tax will take effect from 2026.

First, the plan will target Chinese and Russian companies that export iron, steel, aluminum, pipes, electricity, and cement to the EU, as climate standards are the lowest in those countries.
This would be a serious punch, as, for example, Russia’s exports to these sectors amount to $ 7.6 billion a year.

Not only the Russians and the Chinese, but also the Europeans themselves face problems.
First of all, this concerns the automotive industry – in particular, the European Commission’s plan envisages a gradual transition to environmentally friendly vehicles.

This suggests banning petrol and diesel-powered vehicles. At the same time, it is planned to develop the service infrastructure of electric vehicles and increase the number of charging stations – it is planned to invest 50 billion euros in this field in the following ten years as public and private investments.

The European Commission also obliges airlines and maritime navigation to use low-carbon synthetic fuels when traveling within the EU.

Representatives of European industry are already opposed to the plan. For example, the European Aluminum Association, which unites European aluminum producers, strongly opposes the introduction of new regulations, as the plan favors foreign competitors and at the same time has nothing to do with combating climate change.

First of all, this refers to the CO₂ allocation quotas, which are distributed free among heavy industry companies today, and the new document envisages their equal sale for both – European manufacturers and foreign companies.

The plan is to compensate European companies for 75% of the cost of purchasing CO₂ emission certificates although this will not be enough. In addition, a tax will be added, which will significantly increase the costs of European companies.

In European factories, 6.7 tons of CO₂ are discharged during the production of 1 ton of aluminum.