The World Earth Day just passed has raised the attention to global climate change again. Especially in the field of foreign trade, as the European Parliament adopted the Carbon Border Adjustment Mechanism (CBAM), which means that the world's first carbon tariff is one step closer to implementation, and CBAM will become the world's first mechanism to address global climate change in the form of a carbon tariff. It is understood that the CBAM must be officially approved by the Council of the European Union and eventually published in the Official Journal of the European Union, and will take effect 20 days after its publication.

The data released by Eurostat shows that the EU-27 trade with China in 2022 is 856.3 billion euros, an increase of 22.8% year-on-year. Among them, EU imports from China were EUR 626 billion, an increase of 32.1%. China is the second largest trading partner and the first source of imports for the EU in 2022. If we go by last year's data, China should be the largest source of implied carbon emissions from EU imports.

"The introduction of the EU CBAM has limited impact on Chinese exports in the short term, and the current export volume of related products to Europe from the covered industries is not large. With the advancement of the carbon tariff link, its impact will also be transmitted to the upstream and downstream of the industry chain of these industries." Hu Qimu, chief researcher at the China Steel Institute of Economic Research, said.

The goods covered by CBAM include iron, steel, cement, aluminum, fertilizer, electricity, hydrogen and, under certain conditions, indirect emissions, in addition to screws and bolts and downstream products similar to steel products will also be included, according to the European Parliament announcement.

In terms of product structure, the dominant commodities exported to the EU in 2022 are mainly concentrated in the categories of electrical machinery, mechanical appliances, vehicles, furniture and lamps, organic chemicals, toys, clothing, plastics, instruments and equipment, which account for 72.85% of the total exports to the EU. However, as CBAM promotes the withdrawal of free quotas from the EU carbon market, it will gradually affect the products imported from China by the EU. According to the calculations of Huasheng Green Industry Development Institute, the implementation of CBAM will increase the cost of China's exports to the EU by 6% to 8% of the relevant enterprises.

From a longer-term perspective, CBAM may only be a starting point, not an end point. Driven by the demonstration of the EU, the process of introducing their own carbon tariff mechanism in the United States, Canada and other countries will also be accelerated. In this regard, Hu Qimu analyzed that if exporters do not take the initiative to take measures to reduce carbon, it will lead to the price of their export products rising, which will also lead to a certain degree of price increase of downstream products in related industries. In a way, CBAM will force exporters to reduce carbon emissions, so as to achieve transformation and upgrading.

In the view of Wang Jian, a member of the expert committee of CCPIT and professor of the University of International Business and Economics, the launch of CBAM may change the trade pattern and accelerate the process of greening trade. He said that in the future, all parties may have to carry out carbon measurement on all aspects of the production, processing and circulation of goods, "which is like having ingredient lists for food and energy-saving tables for home appliances, goods need to be marked with relevant carbon reduction information.

In fact, there are two sides of the same coin regarding the performance of Chinese companies in green and low carbon.

On the one hand, China is now the world's leading manufacturer and exporter of various green technologies. Data shows that China is the world's leading supplier of electric vehicles, with a 40% share of the world market; China has a 40% share of the wind turbine market; a 35% share of the green hydrogen energy market; China supplies about 80% of the world's solar panels ...... In terms of the steel industry, which emits more carbon, China Baowu and other large enterprises have cooperated with Rio Tinto and other internationally renowned companies in low-carbon ironmaking projects and research to reduce carbon emissions.

On the other hand, although China has been practicing the concept of green and low-carbon development for a long time, and clearly put forward the goal of "double carbon" in 2020, and the national carbon market was officially opened in 2021, there are still many difficulties at the operational level to further improve the national carbon market and bring China's carbon market in line with international standards. Wang Jian said, "This requires more Chinese enterprises to establish a green and low-carbon awareness, and our government needs to guide the transformation and upgrading of enterprises in the form of the market, especially the carbon market, on the one hand, and learn the corresponding rules of the European Union on the other hand, and use the rules to promote enterprises to reduce emissions and carbon."

"Enterprises in a leading position in the green low-carbon transformation process may usher in new opportunities. And for enterprises with high carbon content, especially large enterprises are more likely to cooperate with the upstream and downstream of the industry chain, so as to achieve green upgrading. The key is that small and medium-sized enterprises are weaker and may need more efforts from themselves and more help from government departments in this regard." Hu Qimu suggested that in the short term, exporters can use the CBAM transition period, etc. to delay or reduce carbon tariff payments, but in the long term, the only way for enterprises to cope with carbon tariff mechanisms such as CBAM is to transform and upgrade and continuously improve their carbon management capabilities. He also suggested that government departments need to help SMEs achieve green and low-carbon transformation and upgrading through training, providing public welfare knowledge services or technical services, guiding SMEs to participate in the supply chain carbon reduction in the industrial chain led by large enterprises, and using green financial instruments, so as to help enterprises better carry out international trade.