The EU Carbon Border Adjustment Mechanism and its Influence on Steel Imports from Taiwan

In order to avoid carbon leakage, the EU decided to introduce the Carbon Border Adjustment Mechanism to put a fair price on embedded carbon emissions of products imported into the EU. Once the CBAM is operational, importing companies will have to declare the embedded emissions for their products and surrender the corresponding amount of CBAM certificates. Taiwan is an important trade partner of the EU, especially for electronic components, and also for base metals like Iron & Steel or Aluminium. The industrial manufacturing for base metals yields high Scope 1 greenhouse gas emissions; additionally, power generation in Taiwan relies heavily on fossil fuels. This paper identifies the Iron & Steel product flows from Taiwan to the EU. It describes the CBAM requirements and the potential impact on Taiwanese Iron & Steel exports, pointing out challenges and opportunities. It intends to support Taiwanese companies to prepare for CBAM rules both during the transition phase and once the system is fully active.