Plans are in progress to construct an electric arc furnace aimed at producing green steel for Europe on Thailand’s eastern coast. This will benefit Europe from contentious new rules that will force buyers to pay tariffs on high-carbon imports.
In 2023, the EU imported 16 million tons of finished steel products from Asia, with mills in South Korea, Japan, Taiwan, China, India, and Turkey competing fiercely in a highly price-sensitive market.
Governments and industry associations in Asia have lobbied against Europe’s Carbon Border Adjustment Mechanism (CBAM), and it could overshadow the COP29 climate talks in Baku, Azerbaijan, next week, with China and others calling for an end to green trade barriers.
Launched formally in 2023 as part of the European Green Deal, CBAM aims to prevent companies from getting a free pass on carbon compliance costs by importing commodities from regions with lower environmental standards. Importers will have to buy credits in order to offset the emissions associated with steel, aluminum, cement, electricity, and chemicals sourced from outside the EU, as per the reports of Zawya
CBAM plans to impose levies on steel production by 2026, which is responsible for around 7% of global carbon dioxide emissions. These levies are expected to be fully phased by 2034, says reports on Zawya.
This change is expected to produce cleaner but costlier technologies that are more competitive and open up the market for firms like Meranti Green Steel, which is building the Thai plant and reviving Thailand’s steel industry.
“We see (CBAM) as an opportunity,” Meranti’s chief executive Sebastian Langendorf told Reuters. “We do believe that new, focused green steel players have an advantage: we have no CO2 legacy.”