summary:
In order to grasp the trend of carbon reduction in the supply chain of the steel and metal industry and the feasible carbon reduction practices of small and medium-sized enterprises in this industry, this article summarizes the latest development of the EU carbon border management mechanism, the overview of the export of steel and metal products to the EU, and the promotion of supply chain reduction by major steel manufacturers. Carbon trends, and drawing on the carbon reduction experience, spirit and practices of small and medium-sized metal fastener manufacturers in the UK, Sweden and other countries, three major response suggestions are put forward as a reference for policy implementation and plan advancement.
1. EU carbon border management mechanism:
After years of discussions, the EU finally reached an agreement on the Carbon Border Adjustment Mechanism (CBAM) on May 10 this year (2023) and completed the legislative work. According to information released by the European Commission, CBAM will enter the transitional phase from October 1, 2023, and will be officially implemented from January 2026. The European Commission also pointed out that after CBAM enters the transition period, EU local importers must complete the first wave of returns by January 31, 2024 at the latest.
After CBAM enters the transition period, when cement, steel, aluminum, fertilizer, electricity, hydrogen and other products are imported into the EU, they will need to submit product carbon content data. However, during the transition period, importers only need to submit carbon content data for the above products, without additional Pay any expenses. The EU hopes that CBAM stakeholders (importers, manufacturers, government departments) will regard the transition period as a pilot and learning period. At the same time, the EU will also collect necessary information during the process to improve Methodology for calculating carbon emissions.
According to the Official Journal of the European Union, steel, aluminum, hydrogen and other products only need to declare direct carbon emissions, while other products must declare direct carbon emissions and indirect carbon emissions generated by the use of electricity. The calculation formula of product carbon emissions is carbon emissions per unit product × product quantity.
The calculation of carbon emission per unit product can be further divided into simple goods and complex goods according to Annex 4 of the Act (ANNEX IV). The former refers to products whose raw materials or fuels used in the manufacturing process do not contain embodied carbon emissions. This type of product only needs to calculate the carbon emissions generated by its production process. Complex products refer to products manufactured using simple products. The calculation of the carbon content of the product must include the direct carbon emissions generated during the production process and the carbon emissions implicit in the raw materials used. However, the practical differences between the two and the detailed information on how to calculate them are still waiting for the EU to announce the implementation details.
On the other hand, when importers are unable to declare product carbon content data, they can also use the default values provided by the European Commission for calculation. The EU will publish relevant detailed information in the CBAM implementing act for the reference of importers.
2. Overview of my country’s steel and metal products exported to the EU:
After inquiry, in the past three years (from 2010 to 2011), among my country's exports to the EU, the export value of steel and metal products (aluminum products) controlled by CBAM has shown an upward trend. The steel products segment grew from US$2 billion in 2010 to US$4.215 billion in 2011, a growth rate of more than double. Among them, further analysis shows that steel exports are dominated by screw and nut products (item number 7318) in the lower reaches of the industrial chain. Its export value increased from US$1.043 billion in 2011 to US$1.677 billion in 2011, a growth rate exceeding 60% , and the export quota of screws and nuts also accounts for a considerable proportion of the export quota of steel products (52.15% in 109, 34.97% in 2010, and 39.78% in 2011). The aluminum products segment grew from US$954 million in 2010 to US$156 million in 2011, a growth of nearly 64%.
Participate in the carbon reduction trend of the steel and metal industry:
Small and medium-sized enterprises in the steel and metal industry are mainly distributed in end product manufacturers (such as screw and nut manufacturers) downstream of the industry chain. However, large upstream steel companies, as suppliers of raw materials, are still decarbonizing the entire industry chain. plays a key role in the process. Through the survey of steel manufacturers, including ArcelorMittal, which ranks first in the industry in terms of turnover in Luxembourg, POSCO of South Korea, and Nippon Steel Corp of Japan, etc. Enterprises and the upstream of the steel chain mainly promote industrial carbon reduction through four major measures: energy substitution, innovative processes, supplier management, and international influence.
First, by improving the energy efficiency of production lines or introducing renewable energy, we can fundamentally reduce the carbon emissions generated by corporate operations. Secondly, it is to invest in innovative technologies to improve existing product processes, such as developing hydrogen reduction steelmaking technology (hydrogen steelmaking), replacing coal with hydrogen that only produces water vapor (H2O), and reducing the carbon produced by steelmaking through the process. emissions, or develop carbon capture technology to capture the carbon dioxide in the blast furnace and reuse it. Third, through supplier management measures, suppliers are required to set carbon reduction targets and implement carbon reduction measures. Fourth, by cooperating with international organizations (such as the World Trade Organization) to set industrial carbon reduction standards or pathways, drive peers to accelerate actions and promote the decarbonization of the steel industry.
4. Carbon reduction cases of small and medium-sized enterprises in the international steel and metal industry:
(1) UK Apex Stainless Fasteners
Founded in 1991 in the small town of Bilston in central England, Apex Stainless Fasteners (ASF) is a stainless steel fastener manufacturer specializing in customized services. It has between 50 and 200 employees and claims to be Europe's largest fastener manufacturer. The region's leading supplier of stainless steel fasteners. In order to respond to the issues of net-zero emissions and corporate sustainability, ASF not only introduced ISO 14001 to establish the company's environmental management system, responded to the Science Based Targets initiative (SBTi), and also formulated environmental policies, it will be limited to 2030. Set climate action, recycling, waste management goals. It includes three major environmental goals: achieving Scope 1 and Scope 2 net-zero emissions by introducing renewable energy and electric vehicles, increasing the waste recycling rate to 90%, and reducing waste to 20%.
ASF is also promoting digital transformation, hoping to improve operational efficiency and reduce paper consumption through the digitization of operations (the amount of paper used by 50% has been reduced in 2021 compared to the previous year). In addition, ASF also cooperates with packaging cooperatives to promote low-carbon packaging. By using recycled raw materials to replace existing plastic packaging materials, on the one hand, it meets local regulations and on the other hand, it reduces the carbon footprint of products.
(2) British A. Perry Ltd.
Established in 1925, A. Perry Ltd. (APL), currently a fourth-generation family business, is also a fastener manufacturer, specializing in the manufacturing of hardware fastener products for agricultural machinery and buildings. Focusing on environmental and sustainability issues, APL Company promotes the 4R (Reduce, Reuse, Recycle Replace) strategy, which includes reducing energy consumption, banning the use of disposable products, increasing recycling rates, and material substitution.
In order to reduce energy consumption, APL replaced all lighting equipment in offices and factories with LED lights, combined with infrared sensors, so that the lights are only activated when needed. Secondly, APL has also introduced automatic warehousing in the factory, allowing robots to replace labor and further reduce the use of lighting equipment. Third, APL has also installed solar photovoltaic panels on the roof of the factory to introduce more renewable energy into the company's operations. It has also upgraded the insulation materials of offices and factories to reduce the operational needs of heating equipment.
In terms of material substitution, APL actively promotes environmental packaging (Eco Packaging), with the goal of reducing the use of 30% plastic in packaging materials this year, and using recyclable materials (such as paper instead of tape) or recycled plastic to replace non-recyclable plastic packaging.
(3) Swedish Bumax AB
Bumax AB is located in the steel settlement Å shammar, 200 kilometers north of the Swedish capital Stockholm. It has been producing metal fasteners since 1899 and stainless steel fasteners since 1926. Bumax AB6 is a representative small and medium-sized fastener manufacturer in Sweden (approximately 51 to 200 employees). It claims to be able to produce the strongest fasteners in the world and is marketed around the world under the BUMAX brand.
In order to promote the implementation of sustainable management, Bumax AB has established an "Environmental Policy and Code of Conduct" (Environmental Policy) and five medium- and long-term goals, including: (1) Producing or procuring renewable energy before 2030 to reduce scope 1 and 2 emissions Return to zero, (2) achieve raw material recovery rate of 90% and zero waste before 2030, (3) reduce 20% waste before 2030, (4) actively cooperate with relevant laws and policies in the operating area, (5) fully cooperate with REACH With RoHS policy etc.
In fact, Bumax AB has been actively cooperating with Linköping University and the University of Gävle since 2011 to achieve the goal of sustainable business operations through energy conservation and carbon reduction. Specific achievements include the electrification of heating equipment, the introduction of 100% renewable energy in factories in 2019, and the replacement of old lighting equipment. So far, carbon emissions have been reduced by more than 62% (compared to 2011). In addition, supporting measures such as roof insulation facilities, energy-saving glass, energy-saving factory folding doors, hot air recovery and reuse, and outsourcing of waste water recycling management (originally handled by ourselves) are also used to reduce heat escape and provide employees with A more comfortable working environment with machines.
5. Findings and suggestions:
(1) The amount of steel and metal products exported to the EU continues to rise, and both upstream and downstream supply chains are actively promoting carbon reduction.
Import and export trade statistics show that the amount of my country's CBAM-controlled steel and metal products exported to the EU has shown an upward trend in the past three years (109 to 111). The export of steel products more than tripled, from US$2 billion in 2010 to US$42.15 in 2011. Among them, the export quota of screws, nuts and other fastener products also increased from US$1.043 billion in 2010 to US$1.677 billion in 2011. Aluminum product exports also increased from US$954 million in 2010 to US$156 million in 2011, an increase of nearly 64%. At the same time, scanning the industry's upstream international manufacturers and downstream small and medium-sized manufacturers, it can be found that the former are reducing carbon emissions from steel refining through manufacturing processes, and downstream manufacturers are also responding to industry development trends by formulating environmental policies.
(2) International experience shows that small and medium-sized enterprises can also respond to the carbon reduction trend through multiple carbon reduction measures.
Although raw materials are limited by the upstream steel refining plants, small and medium-sized manufacturers in the downstream of the steel industry supply chain can also formulate environmental policies and introduce renewable energy into company operations and production lines, and electrify equipment (such as transportation vehicles, Heating equipment, etc.), promoting energy conservation (LED lighting equipment and induction devices, energy-saving buildings, etc.), reducing and recycling waste, and environmentally friendly packaging (using recycled plastic or paper, etc.) to reduce their Category 1 and Category 2 carbon emissions. quantity. In addition, from the cases, we also found that promoting digital transformation and cooperating with third parties (or outsourcing business to professional services) can also help small and medium-sized metal fastener manufacturers to promote corporate carbon reduction and adapt to international sustainability. and carbon reduction trends.
(3) Continue to pay attention to the development of international regulations and collect successful cases as a reference for response measures.
The issue of carbon reduction for small and medium-sized enterprises is deeply affected by international regulations and the dynamics of major industrial companies, especially given that the EU has not ruled out expanding the scope of controlled products, and the implementation details such as product carbon content calculation and verification have not yet been announced, and in the past CBAM legislation process, the EU has made many adjustments Based on experience in the scope of listed products and the timeline for promoting the bill, we must continue to pay attention to the development of CBAM and related regulations and provide feedback to policy planning, so as to promptly adjust response measures and properly support small and medium-sized enterprises. On the other hand, we will also continue to collect successful cases of carbon reduction by international small and medium-sized metal manufacturing companies, and capture their carbon reduction spirit and measures to serve as a reference for my country's small and medium-sized enterprises in the same industry to promote corporate carbon reduction.
Attachment 1
CBAM controlled steel and metal products item number
1. Iron and Steel
2. Aluminum
Source:
1.https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
2. For specific items covered by each product, please see Appendix 1.
3.https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AL%3A2023%3A130%3ATOC
4. Data source: Import and Export Trade Database of the Republic of China, Bureau of International Trade, Ministry of Economic Affairs
5.https://www.apexstainless.com/
6.https://www.bumax-fasteners.com/
7. The information is taken from the latest text of EU CBAM: REGULATION (EU) 2023/956 OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL of 10 May 2023 establishing a carbon border adjustment mechanism (Text with EEA relevance), ANNEX II
Sponsor: Ministry of Economic Affairs, Small, Medium and New Enterprises Agency, Ministry of Economic Affairs
Execution unit: Plastic Industry Technology Development Center
