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Germany's Supporting Measures Not Ready While CBAM is in Pilot Phase

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2023-10-30

Handelsblatt reported on September 28 that there is still no consensus within the German government as to whether CBAM should be administered by the German Customs Service (under the Federal Ministry of Finance) or the Carbon Emissions Trading Authority (under the Federal Ministry of Economics). Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce, said that affected companies are still trying to understand the complicated rules and to inform foreign exporters of the information they should submit. The situation is confusing because companies have no solutions for their questions. In addition, Dirk Jandura, president of BGA, pointed out that importers have to rely on foreign manufacturers to provide information on the carbon footprint of their products, but the information may not be easy to obtain, and even if it is obtained, there is a lack of experts in the field to certify the reliability and validity of the information, and there are loopholes in the reliability and validity of the information.

On the other hand, although European manufacturers participating in the international market have already received free emission certificates, the number of certificates is not enough to eliminate the cost of CO2 emissions in the entire production process due to the nature of the policy and can only partially reduce the cost of CO2 emissions. In the future, when CBAM fully replaces the free quota, manufacturers will have to bear the full cost of carbon emissions, which will reduce their international competitiveness. The question of how to compensate companies in order to maintain international competitiveness is still under discussion.

The EU plans to ensure the export competitiveness of European companies through international collaboratin and a comprehensive multilateral climate agreement. To this end, German Chancellor Olaf Scholz has promoted the establishment of a "Climate Club" at the G7 summit in the hope of reaching a unified price agreement for carbon dioxide, but it is still far from being achieved. Carsten Rolle of BDI criticized that the implementation of CBAM is imminent, but the EU's complementary measures to protect companies' exports are still far from being realized.

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