German companies that will be affected by the European Union’s (EU) carbon border tax on imports of certain products are not sufficiently prepared for the mechanism, according to a survey by consultancy Deloitte. This means that many of them are either not familiar with the scheme or believe they will not be affected.
The Carbon Border Adjustment Mechanism (CBAM) will impose a tax on imports of electricity, aluminum, cement, fertilizers, hydrogen, iron, and steel from non-EU countries that do not have their own carbon pricing schemes. It will affect a large number of German importers, according to Deloitte.
The EU’s carbon border tax is expected to have a profound impact on exporters from the Western Balkans. The CBAM, which will take effect in October 2023, will initially be limited to reporting requirements, while financial payments will be phased in from 2026.
60% of German importers are not familiar with the CBAM
According to the survey, 60% of German companies which import affected products do not know of the scheme, while only 50% of those who are familiar with it say their company will be affected.
Also, less than half of the respondents are preparing for the start of the transitional phase, during which they will be required to report carbon emissions stemming from the production of imported products, Deloitte added.
A majority of German firms familiar with the scheme expect a high financial impact
On the other hand, nearly 60% of the respondents expect that the CBAM will make their business less competitive, with 56% expecting a high financial impact. At the same time, slightly under 18% expect positive effects on their competitiveness.
Almost half of the respondents plan to stay loyal to their non-EU suppliers
Despite the CBAM, many German companies, 48%, intend to stay loyal to their suppliers outside the EU, while around 40% expect changes in their supply chain, according to the survey.