In the provisional agreement, ‘hydrogen’ is newly added to 5 existing items such as steel
The scope of emission is also expanded to ‘indirect emission’… Pilot application from October next year
Insufficient response from domestic small and medium-sized enterprises… In full-scale implementation, damage ‘snowball’
The European Union (EU) so-called ‘carbon border tax’ pilot implementation is approaching next year, but the companies are pointed out that they are still lacking in preparation. As additional costs are imposed according to the carbon content of imported goods, there are concerns that the damage may be concentrated on exporting small and medium-sized enterprises that lack the capacity to respond.
■ Increased items subject to EU carbon border tax
According to the Ministry of Trade, Industry and Energy on the 13th, the EU tentatively agreed on the carbon border adjustment system on the 12th (local time). Originally, the EU Commission planned to apply the carbon national economy map to only five items: steel, cement, fertilizer, aluminum, and electricity from October next year. However, as the European Parliament insisted on expanding the target items, hydrogen was added to the existing items.
The scope of carbon emission has also been expanded. The draft included only direct emissions ’emissions from the production of goods’, but some indirect emissions were included as the European Parliament demanded that indirect emissions, meaning ‘greenhouse gas emissions from the process of generating electricity used in the production of goods’, should also be included. I decided to do it. An official from the Ministry of Industry explained, “The provisional agreement will be finalized following approval by the EU Council of Ministers and the European Parliament.”
Accordingly, if the carbon border adjustment system is fully introduced from 2026 at the earliest following the new carbon emission reporting obligation next year, EU importers will have to purchase a ‘certificate’ equal to the amount of carbon contained in Korean products. The specific price of the certificate will be determined in conjunction with the EU carbon emission trading system. For example, if the price of carbon credits in the EU is 100,000 won per ton and Korea is 20,000 won, the importer must purchase a certificate worth 80,000 won, the difference.
The introduction of the carbon border adjustment system is expected to increase the burden on companies. Exports of steel and aluminum to the EU were $4.3 billion and $500 million, respectively, last year. Some steel conglomerates are predicted to incur an additional burden of hundreds of billions of won a year if the free allocation benefit is completely abolished.
■ It is difficult to estimate damage to small and medium-sized enterprises
Above all, it is difficult to estimate the extent of damage to small and medium-sized enterprises. These companies are not subject to the greenhouse gas emission trading system or the energy target management system, so it is not easy to accurately calculate carbon emissions. In fact, according to a fact-finding survey conducted by Gyeonggi-do last month on companies participating in the ‘Environmental, Social, and Governance (ESG) Management and Carbon Border Tax’ education, 7 out of 10 small and medium-sized enterprises (SMEs) are not responding properly to the carbon border adjustment system. investigated
Unlike the greenhouse gas emission trading system, which was a facility unit, the carbon national economy system focuses on products, which is also a burden for companies. This is because in the case of plastic products, all carbon emissions from the naphtha stage, which is the raw material of the product, must be included. Shin Ho-jeong, head of the National Clean Production Support Center at the Korea Institute of Industrial Technology, said, “Large companies can calculate how much carbon emissions are generated by product, but it can be difficult for small and medium-sized companies.” It should be provided to small and medium-sized enterprises in more detail,” he said. There is also a need to expand the information necessary for calculating the carbon footprint of each product and the basic information for calculating carbon emissions, such as crude oil, metal, electricity, and water, which are difficult for individual companies to grasp.
As the EU carbon border adjustment system became a reality, the government also started preparing countermeasures. On this day, the ‘EU Carbon Border Adjustment Response Status Review Meeting’ was held at the Seoul Government Complex presided over by Bang Bang-gyu, head of the Office for Government Policy Coordination, and the government’s response status was reviewed and support plans for Korean companies were discussed.