As the EU Carbon Border Adjustment Mechanism (CBAM) is about to be put into trial operation in October 2023, the US Clean Competition Act (CCA) is also planned to be launched in 2024. The difference is that the US CCA Act does not have a trial period. Facing the oncoming carbon tariff systems in various countries, only by continuing to pay attention to policy trends, understanding the rules of the game, and taking carbon inventory and carbon reduction measures can we seize the opportunity in this carbon tariff trade. Next, we will take you to understand The American CCA Act.
On June 7, 2022, the U.S. Senate proposed the Clean Competition Act, which aims to reduce climate pollution, strengthen the competitiveness of U.S. manufacturing, and implement carbon border adjustments for energy-intensive imported products. The bill has completed its second reading. If Carbon tariffs will be levied on domestic manufacturers and importers in the United States starting in 2024. The industries levied include oil mining, natural gas mining, underground coal mining, pulp mills, paper mills, newsprint mills, paperboard mills, refineries, ethanol, organic 25 industries including chemicals, fertilizers, glass, cement, lime, steel, aluminum, hydrogen, and adipic acid.
What is different from the EU CBAM is the baseline for carbon tariff calculation and the objects to be levied. The US CCA Act charges carbon fees for importers and domestic manufacturers, but domestic manufacturers can obtain tax rebates when exporting to other countries; the calculation method is based on the US Department of the Treasury. The reported information calculates the average carbon content of each category of U.S. products as the baseline for levying carbon taxes. If the manufacturer's carbon intensity exceeds the carbon intensity baseline applicable to the U.S. industry, it must pay carbon tax on the excess. The calculation method is [exceeding the industry’s baseline In addition, it is worth noting that if taxable products exported to the United States use other taxable products as raw materials in the manufacturing process, the carbon emissions generated by the raw materials must also be included in the calculation. From 2026, the affected industries will expand Finished products containing more than 500 pounds of carbon-intensive raw materials will drop to more than 100 pounds in 2028.
The United States is Taiwan's second largest exporter, with exports worth approximately US$75.1 billion in 2022, an increase of 14% compared with the previous year. According to data from the International Trade Center (ITC), among the U.S. import control items in 2022, steel products are on Taiwan's list, ranking fifth, accounting for 3.7% of U.S. imports. The top four countries are Canada (21.91 TP3T), Mexico (12.5%), Brazil (9.6%), and South Korea (6.1%). It can be seen from this "competition" bill that it mainly punishes manufacturers in carbon-intensive industries and increases U.S. companies with relatively low carbon emissions. Competitiveness, 70% of the U.S. steel industry is produced by melting scrap steel in electric arc furnaces. The U.S. steel industry also claims that their carbon emissions are the lowest in the world and have advantages for the EU's CBAM and CCA regulations.
In the face of the fierce competition bill in the United States, only by first conducting a carbon footprint inventory, understanding the carbon emissions of the affected industries, and taking carbon reduction measures in the manufacturing process as soon as possible can we avoid falling behind in this trade war. Although the bill has not been officially passed in the third reading and the collection time may be delayed, it is imperative to tax carbon-intensive industries, and the scope of collection will be more and more, and the carbon price will also increase year by year. Energy conservation and carbon reduction are important for enterprises. It is an indispensable step to enhance competitiveness and sustainable development, especially since the United States is Taiwan's main export market. Taiwan manufacturers should prepare as early as possible.
In order to help small and medium-sized enterprises solve their carbon anxiety, the Chinese government provides policies such as carbon reduction and technical training, and encourages enterprises to actively participate. The recently launched "Ministry of Economic Affairs, Small, Medium and New Enterprises Agency_Carbon Service" LINE@ provides enterprises and the public with information on "carbon" Relevant knowledge, course information, carbon emission estimation tools, carbon reduction diagnosis and subsidies, etc., integrate the above services into mobile phones to enhance people's and enterprises' understanding of carbon, and reduce the gap in uneven access to information, making carbon reduction a part of life. part.
Finally, with regard to the trade policies introduced by European and American countries, small and medium-sized enterprises should regard it as a turning point. Through strategies such as leading the manufacturing of low-carbon equipment, strengthening technological innovation, and promoting green transformation and sustainable development, they can help enterprises grow rapidly and at the same time enhance the industry. The competitiveness of exports is beneficial to the future development of enterprises.
Author: Commissioner Cao Yuru, Policy Research and Analysis Group, Department of Quality, Environmental and Safety, Plastic Industry Technology Development Center
