South Korean aluminium and steel industry to face trouble from EU's new carbon policy

On 15th July 2021, South Korea's Ministry of Industry stated that the nation's aluminium and steel sectors are expected to be counter trouble from the European Union’s carbon border tax.

The announcement from the ministry came a day after the EU declared its intention to implement the Border Carbon Emissions Adjustment Mechanism (CBAM), aimed at imposing a ‘carbon price’ on imports of certain products in the country.

Importers need to purchase ‘carbon certificates’ equating to the amount of carbon spent to manufacture the products. Subsequently, products with higher carbon emissions will lose their competitiveness in the European market.

South Korea assumes that the new policy could register a negative impact on the aluminium and steel industry.

Asia's fourth-largest economy, South Korea exported $186 million worth aluminium and $1.5 billion worth of steel in 2020 to the EU market.

South Korea expressed its grief over CBAM and said: “We should not serve as an unnecessary trade barrier although the policy complies with World Trade Organization rules.”

The ministry said: “We will continue to conduct a thorough analysis of CBAM and continue negotiations with the EU.”

However, South Korea is committed to achieving carbon neutrality by 2050.

POSCO, South Korea's leading steel producer has also pledged to achieve carbon neutrality by 2050 by exploring low-carbon solutions to accelerate its decarbonisation through alternative and innovative technologies.