EU's guidelines on carbon border tax imports offer relief to Korean steelmakers

Industry

Published: 15 Jun. 2023, 18:00

EU's guidelines on carbon border tax imports offer relief to Korean steelmakers

European Union flags outside the European Commission headquarters in Brussels, Belgium [REUTERS/YONHAP]

As the European Commission released a draft of rules governing its carbon border tax on imports, Korean steelmakers got temporary relief thanks to a more relaxed rule for reporting obligations.

The European Commission on Tuesday published a draft for reporting obligations for the Carbon Border Adjustment Mechanism (CBAM), Tuesday.

CBAM requires importers to buy permits for their carbon emissions in the same way as producers in the EU trading bloc do under its emissions trading system.

CBAM gained approval from the European Parliament and European Council in April. The world’s first carbon border tax will be introduced for six items: steel, cement, aluminum, fertilizer, hydrogen and electricity.

Exporters of the six goods are required to report embedded carbon emissions to European Union regulators.

However, Korean companies will be able to report their embedded emissions on exports based on “equivalent third country national systems” during the first year of implementation, according to the European Commission.

That means that local exporters will be able to use the current emission calculation system, not the EU method, until the end of 2024.

The transitional phase for CBAM begins on Oct. 1 and runs until the end of 2025.

The Ministry of Trade, Industry and Energy said on Wednesday that it will prepare a guideline for local exporters to the EU ahead of the beginning of the transitional phase.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]