popular articles

EUs CBAM: Limited Impact on Asian Voluntary Carbon Credits and Product Prices

The European Union's Carbon Border Adjustment Mechanism (CBAM) could have little effect on Asia’s voluntary carbon market and minimal impact on finished product prices, according to experts at the Asia Climate Summit.

Please share:

The European Union’s Carbon Border Adjustment Mechanism (CBAM), designed to impose a carbon tax on imports to reduce greenhouse gas emissions, is at the center of discussions regarding its potential impact on Asia’s voluntary carbon credit market and export product prices. At the Asia Climate Summit held in New Delhi on October 24, experts shared their views on CBAM’s anticipated influence on these two aspects.

CBAM aims to tax imported goods based on their associated carbon emissions, applying an entry tax according to the carbon intensity of products. However, voluntary carbon credits, primarily used by companies to voluntarily offset emissions, are not eligible for CBAM compliance requirements. Alfredo Nicastro, Senior Vice President at StoneX Carbon Solutions, clarified that CBAM will not increase demand for voluntary carbon credits, as these credits are excluded from compliance with European carbon tax requirements. According to him, “VCM (Voluntary Carbon Market) credits cannot be used for carbon tax compliance, meaning there will be no increase in demand or price in the voluntary market due to CBAM.”

A New Type of Compliance Certificate

To meet CBAM requirements, a specific certificate, referred to as a “CBAM certificate unit,” may be needed for companies seeking compliance. This certificate would verify that imported products into Europe meet carbon reduction standards. Renato Roldao, a member of the European Commission’s International Carbon Pricing and Market Diplomacy Task Force, pointed out that some compliance carbon credits, accepted in other countries for carbon tax purposes, could become eligible for CBAM through international agreements.

Moderate Impact on Product Prices in Asia

Panelists agreed that CBAM will have minimal impact on the prices of finished products in Asia. Hew Slater, an energy and climate specialist at ClientEarth in Beijing, stated that less than 2% of China’s exports to the EU will be subject to CBAM, primarily affecting industries like steel, battery metals, cement, and aluminum. According to Roldao, CBAM will focus on specific imports, such as cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen, with an assessment of embedded carbon emissions at the product level.

Nicastro added that while CBAM may slightly influence the prices of raw materials imported into Europe, costs will ultimately be borne by end-buyers in Europe. This cost transfer to European buyers minimizes the impact on prices in Asia, thereby maintaining stability for Asian producers. Roldao explained that “the price effect will mainly be felt at the product level in Europe, not in Asia.”

Extension of CBAM to Other Sectors

CBAM is also expected to include additional sectors covered by the EU’s Emissions Trading System, notably maritime shipping, where emission offset costs are also expected to be transferred to European buyers. According to Nicastro, this model enables Europe to strengthen its climate objectives without disadvantaging Asian exporters, who benefit from this approach by avoiding a direct impact on domestic prices.

In summary, although CBAM is seen as a tool for controlling emissions on imports for Europe, it seems unlikely to disrupt the Asian voluntary carbon credit market or significantly increase costs for Asian producers, due to the structure of passing costs to European buyers. However, the introduction of specific CBAM certificates could initiate a new dynamic of compliance in trade relations between the EU and its international partners.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Putin proposes mediator role between Washington and Tehran over Iran’s nuclear issue

The Kremlin has confirmed that Vladimir Putin aims to help resolve the nuclear dispute between the United States and Iran, leveraging strengthened strategic ties with Tehran.
Höegh Evi and Aker BP received Approval in Principle from DNV for a maritime carrier designed to transport liquefied CO₂ to offshore storage sites in Norway.
Höegh Evi and Aker BP received Approval in Principle from DNV for a maritime carrier designed to transport liquefied CO₂ to offshore storage sites in Norway.
President Lee Jae-myung adopts an energy diplomacy rooted in national interest, amid a complex international landscape of rivalries that could create challenging situations for the country and its energy businesses.
President Lee Jae-myung adopts an energy diplomacy rooted in national interest, amid a complex international landscape of rivalries that could create challenging situations for the country and its energy businesses.
Norne and the Port of Aalborg begin construction of a 15 mn tonne per year CO2 terminal, supported by an EU grant.
Norne and the Port of Aalborg begin construction of a 15 mn tonne per year CO2 terminal, supported by an EU grant.

Lagos launches carbon credit project for 80 million households in Nigeria

The Lagos State government has launched a programme to deploy 80 million improved cookstoves, generating up to 1.2 billion tonnes of tradable carbon credits.
Paris and Warsaw held a bilateral workshop in Warsaw to strengthen coordination on electricity infrastructure investments and supply security under the Nancy Treaty.
Paris and Warsaw held a bilateral workshop in Warsaw to strengthen coordination on electricity infrastructure investments and supply security under the Nancy Treaty.
Donald Trump firmly rejects any uranium enrichment by Iran, while Russia affirms Tehran’s right to civil nuclear power, intensifying tensions in negotiations over the Iranian nuclear program.
Donald Trump firmly rejects any uranium enrichment by Iran, while Russia affirms Tehran’s right to civil nuclear power, intensifying tensions in negotiations over the Iranian nuclear program.
The US Department of Energy has cancelled 24 projects funded under the Biden administration, citing their lack of profitability and alignment with national energy priorities.
The US Department of Energy has cancelled 24 projects funded under the Biden administration, citing their lack of profitability and alignment with national energy priorities.

U.S. Carbon Black Market: Growing Uncertainty Amid Industrial Tensions

In the United States, the carbon black market faces unprecedented fluctuations in the first half of 2025, driven by declining industrial demand and persistent raw material volatility, casting doubts over the sector's future stability.
Syria has signed a $7bn agreement with a consortium of companies from Qatar, Turkey and the United States to rebuild its national power sector.
Syria has signed a $7bn agreement with a consortium of companies from Qatar, Turkey and the United States to rebuild its national power sector.
European and UK carbon markets paused this week as participants await clarity on future integration of both emissions trading systems.
European and UK carbon markets paused this week as participants await clarity on future integration of both emissions trading systems.
Friedrich Merz confirmed that Germany would block any attempt to relaunch the Nord Stream 2 pipeline, despite internal calls suggesting a potential reopening of dialogue with Moscow.
Friedrich Merz confirmed that Germany would block any attempt to relaunch the Nord Stream 2 pipeline, despite internal calls suggesting a potential reopening of dialogue with Moscow.

The European Union seals strategic energy agreement with OLADE

A memorandum of understanding formalises energy cooperation between the European Union and the Latin American Energy Organization, including permanent EU participation in the organisation’s governance bodies.
Prime Minister Viktor Orban announced that Hungary would oppose the EU's plan to ban Russian energy deliveries by 2027, both legally and politically.
Prime Minister Viktor Orban announced that Hungary would oppose the EU's plan to ban Russian energy deliveries by 2027, both legally and politically.
Michael Kretschmer, Minister-President of Saxony, proposed restarting dialogue with Russia on the Nord Stream 2 pipeline, despite clear opposition from the German government to any reactivation of the project.
Michael Kretschmer, Minister-President of Saxony, proposed restarting dialogue with Russia on the Nord Stream 2 pipeline, despite clear opposition from the German government to any reactivation of the project.
Donald Trump is calling on the United Kingdom to abandon wind energy in favor of revitalizing offshore oil extraction, sparking debate over the economic and political implications of such an energy strategy after their recent trade agreement.
Donald Trump is calling on the United Kingdom to abandon wind energy in favor of revitalizing offshore oil extraction, sparking debate over the economic and political implications of such an energy strategy after their recent trade agreement.

Sino-Egyptian energy deals worth $1.8bn signed during Cairo summit

China and Egypt concluded over 30 energy-focused agreements, including electric vehicles, smart grids and storage technologies.
A consortium led by European Energy has secured prequalification for a Danish carbon capture and storage project in Næstved, aiming to remove 150,000 tons of CO₂ per year under a national subsidy programme.
A consortium led by European Energy has secured prequalification for a Danish carbon capture and storage project in Næstved, aiming to remove 150,000 tons of CO₂ per year under a national subsidy programme.
The joint project by Copenhagen Infrastructure Partners and Vestforbrænding is among ten initiatives selected by the Danish Energy Agency for public carbon capture and storage funding.
The joint project by Copenhagen Infrastructure Partners and Vestforbrænding is among ten initiatives selected by the Danish Energy Agency for public carbon capture and storage funding.
Canadian broker One Exchange partners with Stephen Avenue Marketing to create OX CO₂, a carbon trading platform combining digital technology and human expertise.
Canadian broker One Exchange partners with Stephen Avenue Marketing to create OX CO₂, a carbon trading platform combining digital technology and human expertise.

European Union sanctions 189 new Russian tankers used clandestinely

The European Union has expanded its measures against Russia by targeting nearly 200 new vessels illegally transporting oil, as part of its 17th sanctions package.
Faced with domestic industrial overcapacity, China is stepping up its international renewable energy investments, aiming to dominate global value chains while opening new markets for its companies.
Faced with domestic industrial overcapacity, China is stepping up its international renewable energy investments, aiming to dominate global value chains while opening new markets for its companies.
Brussels aims to persuade the G7 to reduce the Russian oil price cap to $50 per barrel, as part of negotiations on the next sanctions package targeting Moscow’s energy revenues.
Brussels aims to persuade the G7 to reduce the Russian oil price cap to $50 per barrel, as part of negotiations on the next sanctions package targeting Moscow’s energy revenues.
After three years of separation post-Brexit, the United Kingdom and the European Union have announced their intention to examine conditions for the UK's reintegration into the European electricity market, aiming to optimize cross-border exchanges.
After three years of separation post-Brexit, the United Kingdom and the European Union have announced their intention to examine conditions for the UK's reintegration into the European electricity market, aiming to optimize cross-border exchanges.

Advertising