Iron and Steel Industry Warns on CBAM: Emission Values Do Not Reflect Reality

The European Union's Carbon Border Adjustment Mechanism (CBAM) default emission values do not adequately reflect Turkey's low-carbon production structure. The Turkish steel sector has highlighted that the current approach undermines competitiveness and called for default values to be reassessed based on countries' production methods.

Yalçın Ertan, Chairman of the Aegean Iron and Non-Ferrous Metals Exporters Association, emphasized that CBAM, implemented by the European Union, stands out as one of the most important policy instruments of a new era in which global trade is being reshaped on carbon grounds.

"For our steel sector in particular, which has a strong export-oriented structure and robust integration into the European market, CBAM has become not merely an environmental regulation but also a strategic factor directly affecting competitive conditions. The fundamental objective of CBAM can be summarized as preventing carbon leakage and promoting a more sustainable production structure at the global level by preventing production from shifting to countries with lower environmental standards. In this respect, the mechanism provides a framework directly affecting producers exporting to the European Union market and companies importing these products. For this reason, we can say that it is critical that the methods and calculation approaches used in implementation properly reflect the production structures of different countries."

Calculations should be based on actual data from producers verified in accordance with CBAM methodology

Chairman Ertan underlined that Turkey's steel sector occupies a distinct position globally in terms of its production structure and continued as follows:

"In our sector, approximately 70% of production is carried out using the electric arc furnace (EAF) method, that is, largely based on scrap. This is an important advantage that places Turkey among countries with lower carbon-intensive production. However, how this advantage is reflected within the scope of CBAM is a separate matter, since the carbon emissions contained in the product directly affect financial liability. For this reason, how emissions are calculated and the verification of values becomes critical. If such data cannot be fully and properly provided or verified by accredited bodies, default emission values come into play. Consequently, how these values are determined, what representativeness they possess, and to what extent they reflect actual production structures play an extremely decisive role for exporters."

The disclosure of accredited bodies is very important and urgent for overcoming the uncertainty faced by exporters and ensuring continuity of exports.

"As is known, the essential requirement is that emission calculations be performed on the basis of actual data obtained from producer facilities and verified in accordance with CBAM methodology and verified by accredited bodies. Although stipulated as mandatory by the EU within the scope of the accreditation mechanism, it has not yet been determined which bodies will be accredited and granted verification authority. This uncertainty regarding the authorization of verifying bodies and their acceptance at the international level could hamper our companies' timely access to verification services; it could create additional costs and operational disruptions in practice."

An approach that does not align with production realities cannot be accepted

Yalçın Ertan stated: "On the other hand, despite Turkey's EAF-dominated production structure, we see that an approach has been adopted in which default emission values do not adequately reflect this structure and higher-emission production methods are used as the basis, and Turkey's actual emissions performance is represented with a carbon intensity above reality. Particularly for some product groups, the fact that values determined for Turkey exceed even those of regions such as China, where 90% of production is carried out using the high-emission BOF method, demonstrates that the current approach clearly contradicts production realities. We cannot accept an approach that does not align with production realities and creates a serious competitive disadvantage for our sector."

We expect support from our Ministries for export growth

Chairman Ertan stated: "We see that assessments are being made to the effect that the current approach does not fully reflect production realities. Taking into account Turkey's EAF-dominated production structure and reassessing default values accordingly is of great importance to prevent our exporters from being negatively affected by price competition. Furthermore, the uncertainty regarding the authorization of verifying bodies and their acceptance at the international level could hamper our companies' timely access to verification services; it could create additional costs and operational disruptions in practice. For this reason, during this period we expect support from our Ministries in developing a common approach among our relevant institutions and organizations and in bringing necessary initiatives more forcefully to the agenda both in international platforms and in the public eye."