A Spanish importer of clinker has submitted feedback to the European Commission regarding the carbon border adjustment mechanism (CBAM), stating that, if implemented, the EU must ensure that importers are not paying more for carbon in comparison to local manufacturers.

"If the CBAM is to be introduced alongside the EU ETS then it must be adjusted so the total price of carbon per tonne is not any higher than the local producer (competitor) is paying averaged over his total production including any credits (EU ETS) he receives," stated the importer.

The importer provided an example calculation paid by the local manufacturer:
•    EU ETS credit = 400,000t
•    plant production = 500,000t
•    cost of carbon to plant = 100,000t x EUR20 = EUR2m
•    average cost of CO2 per tonne of clinker produced = EUR2m/500,000t = EUR2/t.

The importer also suggested a ‘fair’ CBAM calculation where the importer also pays a total of EUR4/t of carbon tax, as below.
 
Scenario 1 – no carbon paid in source country that is outside the EU ETS
Importer pays EUR4/t, which is the same cost of CO2/t of clinker as the local producer pays as calculated above.

Scenario 2 – carbon is paid in source country that is outside the EU ETS
Cost of clinker (sourced outside the EU) = EUR100/t. This includes EUR2/t carbon tax or similar paid in source country. If we use the total cost of carbon to be EUR4/t (equal to the average cost for the local producer), then the CBAM paid at point of entry to the EU should be EUR2/t.

"In order for the system to be fair and encourage all nations to properly account for carbon it is important that any carbon paid on the product outside the EU should be taken into consideration and be calculated as part of the CBAM," concluded the importer.