On November 16, at the "Xingda Summit Forum 2024", Ge Honglin, member of the Standing Committee of the 13th National Committee of the Chinese People's Political Consultative Conference and President of the China Nonferrous Metals Industry Association, said:"The first sectors to be covered by the EU Carbon Tariff (CBAM) are the cement, fertiliser, steel, aluminium, electricity and hydrogen sectors, based on called 'carbon leakage'.If one country's emissions policies increase local costs, another country with looser policies may have a trade advantage. While demand for the goods being produced remains the same, production may shift to countries with lower prices and lower standards (offshore production), ultimately resulting in no reduction in global emissions. "
Are EU carbon tariffs unreasonable for Chinese steel and aluminum?Regarding this issue, Ge Honglin used four questions to analyze whether the EU carbon tariff is unreasonable for China.
The first question: what is the EU's top priority? Ge Honglin said that for the EU aluminium industry, the top priority for EU governments is that they must be fully aware of the backward situation of the EU aluminium industry in terms of energy saving and emission reduction, and take practical action to accelerate the elimination of backward electrolytic aluminium production capacity, and actually reduce the carbon emissions of the production process. First of all, an additional carbon emission charge should be levied on the products of electrolytic aluminium enterprises in the EU that exceed the world's average level of energy consumption, regardless of whether it uses hydroelectric power, coal power, or hydroelectric power from self-built hydroelectric power stations. If carbon tariffs are levied on Chinese aluminium, whose energy consumption indicators are better than those of the EU, it will actually have the effect of cracking down on the advanced and protecting the backward, making one suspect that it is an act of trade protectionism in disguise.
Second question: Is it right to prioritize cheap hydropower for energy intensive industries instead of people’s livelihood? Ge Honglin said that the EU's approach of prioritizing cheap hydropower to backward electrolytic aluminum production companies has great drawbacks and has led in the wrong direction. To a certain extent, it condones and protects backward production capacity and reduces the motivation for technological transformation of enterprises. As a result, the overall level of electrolytic aluminum production technology in the EU still remains in the 1980s. Many enterprises are still operating products that are clearly listed in China. The obsolete production lines have greatly damaged the EU's carbon image.
The third question: is the EU ready to be reversed? Ge Honglin said that at present, China has formed 10 million tons of hydropower aluminium production capacity, for the annual export of 500,000 tons of aluminium exports to the EU in terms of the amount of aluminium, it is easy to do to export 500,000 tons of hydropower aluminium processing material. In the case of aluminium, due to the advanced energy consumption level of Chinese aluminium, the carbon emission factor of Chinese aluminium products is better than that of similar products in the EU, and the actual CBAM fee payable will be negative. In other words, the EU needs to give reverse compensation for importing Chinese aluminium, and I wonder if the EU is ready to be reversed. However, some people also reminded that the EU aluminium products with high energy consumption brought about by high emissions, will be covered up with the reduction of the proportion of free quotas for EU products.
Fourth question: Should the EU achieve self-sufficiency in energy-intensive raw materials? Ge Honglin said that the EU, according to its own demand for energy-consuming products, should first of all achieve self-sufficiency in the internal cycle, and should not hope that other countries to help take over. If you want other countries to help take over, you must give the corresponding carbon emissions compensation. The history of China's aluminium industry exporting electrolytic aluminium to the EU and other countries has already been turned over, and we hope that the EU's electrolytic aluminium production will achieve self-sufficiency as soon as possible, and if EU enterprises are willing to carry out technological transformation, energy saving and carbon reduction, and reduce costs and increase efficiency, China will be willing to provide the most advanced solutions.
Ge Honglin believes that this irrationality exists not only for aluminum products, but also for steel products. Ge Honglin said that although he has left Baosteel's production line for more than 20 years, he is very concerned about the development of the steel industry. He once discussed the following issues with friends in the steel industry: In the new century, China's steel industry has not only undergone earth-shaking changes in scale, but also in energy conservation and emission reduction, highlighted by long-process steel production. Baowu et al. Most steel companies lead the world in energy conservation and emission reduction indicators. Why does the EU still want to impose carbon tariffs on them? A friend told him that currently, most EU steel companies have switched from long-process to short-process electric furnace production, and they use the EU's short-process carbon emissions as a comparison to levy carbon taxes.
The above is China Nonferrous Metals Industry Association President Ge Honglin's thoughts on whether the EU carbon tariffs on China are irrational, to which, do you have a different view? I hope this article can help you to enter the in depth analysis of this issue.
From "China Metallurgical News"
Post time: Nov-23-2023