{"id":6438,"date":"2025-09-22T10:19:03","date_gmt":"2025-09-22T10:19:03","guid":{"rendered":"https:\/\/climease.com\/?p=6438"},"modified":"2025-09-24T16:26:48","modified_gmt":"2025-09-24T16:26:48","slug":"cbam-2-0-defaults-chinas-ets-shift-and-why-the-eu-should-raise-the-bar","status":"publish","type":"post","link":"https:\/\/climease.com\/en\/cbam-2-0-defaults-chinas-ets-shift-and-why-the-eu-should-raise-the-bar\/","title":{"rendered":"CBAM 2.0 \u2014 Defaults, China\u2019s ETS shift, and why the EU should raise the bar"},"content":{"rendered":"\t\t
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Brussels has the choice to bring the whole world a large step closer to global carbon pricing and set industrial sectors responsible for half of global emissions on a 2 \u00b0C-aligned pathway.<\/p>

EU policymakers can not only make CBAM simpler and more trustworthy, but also kickstart global carbon pricing with one key move. The proposal is simple yet effective: if a CBAM-affected product comes from a country without an absolute-cap Emission Trading System (ETS), the importer would use EU default emissions \u2013 not actual ones as calculated during the Transitional Period \u2013 until that country runs a robust cap-and-trade with credible monitoring, reporting, and verification (MRV). The climate and economic logic is strong:<\/p>

  1. Paving the way to global carbon pricing<\/strong>. Denying producers in countries without a solid carbon pricing & MRV scheme the right to report real emissions under CBAM forces them to lobby their governments to create an ETS aligned with the EU\u2019s. CBAM thus becomes a driver of stronger national climate policies worldwide.<\/li>
  2. CBAM 2.0 prevents \u201cclimate-neutral\u201d resource shuffling<\/strong>. Until now, a green (and often cheaper) Chinese product could still replace a green EU one, entering the EU CBAM-tax-free. Penalising default values for countries of origin lacking a serious carbon price automatically raises CBAM costs, removing the incentive to redirect only the cleanest batches to Europe while selling dirtier output elsewhere. Think tanks like Sandbag<\/a> and ERCST<\/a> have highlighted this loophole.<\/li>
  3. Making CBAM simpler and more trustworthy<\/strong>. Verifying the seriousness of thousands of foreign \u201ccarbon prices\u201d (taxes, rebates, free allocations, levies, fuel taxes, etc.) is unrealistic \u2013 let alone ensuring that those governments don\u2019t refund industries through rebates or other remedies. Defaults should apply, and no deduction should be possible until a non-EU country has an EU-aligned ETS. This means CBAM regulation<\/a> must change: no \u201ceffectively paid\u201d carbon price should allow global suppliers to report real values or deduct that cost from CBAM. The EU should enforce its own standards \u2014 with all humility, it remains the group of nations with by far the most experience in running a functioning carbon market (20+ years of ETS).<\/li>
  4. CBAM 2.0 creates many win-wins.<\/strong> Climate advocates should support it because it strengthens incentives for global carbon pricing. Industry already supports it because it closes loopholes and simplifies CBAM in the short term, while protecting competitiveness.<\/li>
    1. \u00a0<\/li><\/ol><\/li><\/ol>

      2) Country-specific default values don\u2019t make sense for steel & aluminium \u2013 they must be tied to production methods<\/h2>

      Emissions become country-specific only when indirect emissions are counted, since these depend on national grid emission factors. Differences in direct emissions result from production methods, not geography. True, certain production methods are more common in some regions (e.g. DRI-EAF steel in India). However, industrial supply chains and their footprints shift quickly, making country-specific defaults unreasonable for the current metal sector.<\/p>

      In the current CBAM design:<\/p>