How “CBAM” affect global trading on Thinkster

What is CBAM? Let’s get to know CBAM together!

“CBAM” or “CBAM stands for Carbon Border Adjustment Mechanism” is a measure to adjust carbon before entering the border (Carbon Border Adjustment), one of the measures.

Important under Fit For 55, which the European Union has announced under the European Green deal policy (with both achieving Net Zero Emissions by 2050). This is a policy tool designed to tackle carbon leakage. This occurs when companies move production to regions with more stringent environmental regulations. to avoid carbon-related costs in their home country The mechanism determines import tariffs based on the amount of carbon embedded in the product. Therefore, it is safe to say that imported products face similar carbon costs to domestically produced products.

Currently, there are a total of 7 product categories that are within the scope of the CBAM measures, including Aluminum and Iron & Steel, Cement, Fertilizer, Electricity, Hydrogen and Other Downstream Products. And in the near future it is expected that Chemicals and polymers (Organic Chemicals & Polymers) will be included under this measure in the period 2026-2027, and in 2030 it is expected that all product groups will be covered.

In the context of global trading on platforms such as Thinkster, the use of CBAM can have several implications

1. Price impact : Products imported from regions with lower environmental standards may be more expensive due to the carbon tariffs imposed by CBAM. This may lead to higher prices for consumers or lower demand. Shift to domestic production or lower carbon alternatives.

2. Competitive dynamics : Industries in regions with strict environmental regulations may gain a competitive advantage. This is because their products are not subject to the same carbon taxes as imports. This could stimulate domestic production and encourage investment in cleaner technologies.

3. Trade Relations : The launch of CBAM may spark tensions in international trade relations. Especially if different countries It is viewed as an ideology of protectionism or discrimination. Negotiations and agreements on the implementation and exemption of CBAM will be critical to maintaining stable trade relations.

4. Compliance costs: Exporters affected by CBAM may face additional compliance costs to prove the carbon intensity of their products. This may involve implementing new measurement and reporting systems, which can pose challenges. This is especially true for small and medium-sized enterprises.

5. Innovation and Technology Transfer: CBAM can incentivize technology transfer and innovation in cleaner production methods. Because various companies try to reduce your carbon footprint to avoid or minimize taxes. This could contribute to global efforts to combat climate change by promoting the adoption of green technologies around the world.

6. Integration with existing regulations : CBAM must be integrated with existing trade and climate regulations. This ensures consistency and avoids conflict. Coordination between various regulatory agencies at the national and international level there will be a need to improve implementation.

In summary, the introduction of CBAM on a platform like Thinkster could have a significant impact on global trading. influence on price competitiveness commercial relations compliance costs, innovation and regulatory frameworks. This requires careful planning, coordination and international cooperation. To effectively deal with carbon leakage at the same time as reducing disruption to global trade, CBAM measures act as indirect pressure on product manufacturers in developing countries to improve their production processes to be more environmentally friendly and reduce carbon emissions. or turn to invest more in renewable energy In order to be able to compete and enter the EU market.

Reference

https://www.springlake.com.tw/carbon-border-adjustment-mechanism

https://www.set.or.th/th/about/setsource/insights/article/55-cbam

This article is a part of the class “751447 SEM IN CUR ECON PROBВ” supervised by Asst. Prof. Napon Hongsakulvasu Faculty of Economics, Chiang Mai University Write your This article was written by Nattawan Onlam 631615020