Discover how the EU's Carbon Border Adjustment Mechanism (CBAM) impacts tin can exports and how we're adapting for a more sustainable future.
What is the Carbon Border Adjustment Mechanism (CBAM)?
The Carbon Border Adjustment Mechanism, or CBAM, is an EU policy designed to control carbon leakage by introducing a tax on imports from other countries. Carbon leakage occurs when companies in the EU move carbon-intensive production abroad to countries with less stringent climate policies. The CBAM is a part of the EU’s goal to achieve climate neutrality by 2050.
Starting in October 2023, companies importing carbon-intensive products such as steel and aluminum into the EU are required to report their emissions. Tin cans are made out of tinplate and as you all know by now, tinplate is a thin sheet of steel coated with tin. CBAM's definitive regime, meaning the full enforcement of the policy, including the financial obligations will start in 2026. This means that importers will have to pay a tax for the carbon footprint of the goods they import into the EU unless this has already been paid in the country of origin.
What Does CBAM Mean for Our Business?
As an exporter of custom tin cans which are made out of steel, we fall under the category of manufacturers that are affected by the CBAM. While our exports to the rest of the world aren’t affected by this regulation, our exports to the EU will be subject to the new carbon tax.
The CBAM will essentially put a price on the carbon emissions associated with the manufacturing of our tin cans. Tin cans produced in the EU are already subject to the EU’s Emissions Trading System (ETS), which functions similarly to a carbon tax. So the CBAM will level the cost structure between EU manufacturers and the rest of the world in terms of carbon emissions.
However, CBAM will also make manufacturers move toward greener practices and the ones that are able to make the move will have a lower cost as their carbon footprint will be less.
What Are We Doing About It?
At Teksan Tin House, we are very much aware of both the challenges and the opportunities that CBAM comes with. We already started working on the requirements that it brings and the improvements we need to make to take advantage of the benefits.
Reporting: We have already started to calculate and report our emissions to our EU clients. This is already a requirement and we believe that you can’t improve something you don’t measure.
Sustainable Manufacturing Practices: We are analyzing our energy consumption to minimize it where we can and investing in energy-efficient processes. We have always been trying to optimize our operations to minimize waste. These measures will not only help reduce our carbon footprint but also improve our cost efficiency.
Supplier Collaboration: We are working with our raw material suppliers closely and have discussions about their environmental standards. We are happy to find out that they are already prioritizing sustainability and their efforts on reducing the carbon emissions of their tinplate will directly affect our carbon footprint positively.
Exploring What More We Can Do: As I write this, we are exploring partners that would work with us and analyze our manufacturing processes to come up with ways to further reduce the carbon footprint of our products. As always, two heads are better than one.
Moving Forward
CBAM has been around for a while but actual reporting started not long ago. Like with every new thing, we were unsure of what to expect and that made us worried. However, now that we have taken proactive steps to position ourselves to navigate the evolving regulations, we feel more confident that we will use CBAM as a catalyst for growth and improvement.
We are already manufacturing an infinitely recyclable and a very sustainable type of packaging. And this is just one more step towards a more sustainable future.
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