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Philippine companies that export goods such as iron, steel, aluminum, cement, and fertilizers to the European Union (EU) are being encouraged to get ready for a new regulation that will consider the carbon footprint of traded goods. This warning comes from Aaron Cosbey of the International Trade Centre.
In October 1, 2023, the Council of the EU and both houses of the European Parliament tentatively agreed to execute plans for the Carbon Border Adjustment Mechanism (CBAM). The CBAM is a border measure aimed at trying to ensure that foreign producers of certain goods incur the same costs as EU producers.
This proposal will only cover a select group of goods that are exposed to emissions-intensive trade, including electricity. Producers are required to register their operations in an EU-maintained central database. They also need to commission an accredited verifier to assess each installation’s greenhouse gas (GHG) intensity for specific goods.
Before imports of CBAM-covered products, importers or “declarants” must apply for permission to enter the EU. Every year by May 31 they are required to present a report covering CBAM goods consumed or storage and the tons of GHG they contain.
Cosbey believes that the government of the Philippines, along with institutions such as the ITC, ought to help exporters from the Philippines understand the opportunities and risks brought by the CBAM measures. He makes several suggestions for exporting countries’ policies. These involve things such as financing data certification costs that exporters may find too heavy for their small budgets to bear, pushing the EU to help bear part of the expense, and assisting exporters in getting equipped to conform with CBAM.
He also suggests building exporters’ capacity for internal carbon accounting, lobbying in the World Trade Organization for coordination among countries considering CBAM, ramping up existing support for industrial transformation in energy-intensive, trade-exposed sectors, and implementing national carbon pricing. Cosbey stresses that the Philippine government is a potential source of information for Philippine exporters regarding upcoming EU legislations such as the CBAM.
Source: PH exporters urged to prepare for EU carbon adjustment policy