1️⃣ Background and Purpose of CBAM
The European Union (EU) has long strengthened its climate policies to curb carbon emissions and maintain industrial competitiveness. Among these measures, CBAM stands out as one of the most impactful, effectively functioning as a "carbon tariff" on imported goods.
Why CBAM?
EU companies already pay substantial carbon costs under the Emissions Trading System (ETS). Competing against overseas firms with no such burden puts them at a disadvantage, prompting the EU to introduce CBAM.
Policy Objective
CBAM is not simple protectionism — it is a mechanism designed to push global industries toward low-carbon production. The message is clear: “If you export to the EU, you must bear similar carbon costs.”
2️⃣ Core Structure and Covered Sectors
Under CBAM, exporters must submit detailed carbon emission reports and purchase CBAM certificates to offset emissions embedded in their products.
Sectors Covered in 2025
The EU currently applies CBAM to six high-emission industries:
- Steel
- Aluminum
- Cement
- Fertilizer
- Electricity
- Hydrogen
Future Expansion
By 2030, CBAM is expected to expand to include chemicals, glass, paper, automotive components, and additional industrial sectors — creating mounting pressure on Korean manufacturers.
3️⃣ Impact on Korean Export Companies
CBAM will reshape the fundamentals of Korean manufacturing — processes, supply chains, and energy sources — far beyond simple cost increases.
1) Rising Cost Burden
High-emission industries face significant pressure as CBAM certificate purchases reduce export margins. Steel manufacturers using blast furnace methods will be hit hardest, while electric-arc furnace producers hold a relative advantage.
Cost Simulation Example
With an ETS price of €80 per ton, a product emitting 1 ton of carbon must pay an equivalent CBAM charge. In short, carbon competitiveness now directly equals export competitiveness.
2) Structural Risks for Korean Industries
Korean manufacturing still relies heavily on fossil-fuel-based processes. Companies with high EU export dependence face larger impacts, and SMEs lack the resources to build required monitoring systems.
Key Challenges
- Rising costs for carbon data collection and verification
- Burden of energy transition investments
- Lack of low-carbon process infrastructure
- Costs of building EU-compliant reporting systems
4️⃣ Corporate & Government Response Strategies
1) Corporate Strategies
Korean companies must rethink carbon reduction as a survival strategy, not a voluntary ESG initiative.
Three Mandatory Steps
- Accurate Measurement — Build reliable carbon monitoring systems
- Low-carbon Processes — Shift to electric-arc furnaces, efficient equipment
- Supply Chain Alignment — Manage carbon emissions of raw materials
2) Government Strategies
The transition is too large for companies to manage alone — government support is essential.
Government Support Areas
- Expanded R&D for carbon-reduction technologies
- Carbon data platform support for SMEs
- Tax incentives and financial assistance
- Strengthened cooperation channels with the EU
5️⃣ Importance of Supply Chain & Technology Shift
CBAM cannot be solved by improving only the final manufacturing process. Emissions embedded in the entire supply chain directly affect export pricing.
Key Points in Supply Chain Carbon Management
Securing low-carbon raw materials and components is essential. Suppliers reliant on coal or gas may gradually become excluded.
Technology Shift Strategies
- Switch to renewable-energy-based power sources
- Adopt high-efficiency, low-emission production methods
- Evaluate CCUS (Carbon Capture, Utilization & Storage)
- Build real-time carbon monitoring infrastructure
6️⃣ FAQ — Frequently Asked Questions
7️⃣ Conclusion & Outlook
CBAM presents both risks and opportunities for Korean manufacturers. Companies that move early on carbon reduction and process innovation may secure a competitive edge in the EU market.
The most critical factor now is carbon-management capability. Carbon is no longer just a cost — it is a core part of corporate competitiveness. Now is the time to reorganize your entire value chain into a low-carbon model.
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