{"id":574812,"date":"2023-02-14T05:26:40","date_gmt":"2023-02-14T13:26:40","guid":{"rendered":"https:\/\/www.esri.com\/about\/newsroom\/?post_type=wherenext&#038;p=574812"},"modified":"2024-05-10T06:19:44","modified_gmt":"2024-05-10T13:19:44","slug":"planning-for-cbam","status":"publish","type":"wherenext","link":"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/planning-for-cbam","title":{"rendered":"Understanding the Global Impacts of EU\u2019s Carbon Tax"},"author":501,"featured_media":0,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"sync_status":"","episode_type":"","audio_file":"","castos_file_data":"","podmotor_file_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","itunes_episode_number":"","itunes_title":"","itunes_season_number":"","itunes_episode_type":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[484112,469481,22772,471021],"department":[476792,488822],"wherenext-category":[],"industry":[],"class_list":["post-574812","wherenext","type-wherenext","status-publish","format-standard","hentry","tag-carbon-tax","tag-clean-energy","tag-manufacturing","tag-net-zero","department-cxo-priorities","department-sustainability-risk"],"acf":{"short_description":"Some executives in the US and abroad see new EU climate legislation (CBAM) as a sign of things to come. They\u2019re preparing accordingly.","pdf":{"host_remotely":false,"file":"","file_url":""},"flexible_content":[{"acf_fc_layout":"content","content":"What will the green economy mean for international trade? A <a href=\"https:\/\/www.consilium.europa.eu\/en\/press\/press-releases\/2022\/12\/13\/eu-climate-action-provisional-agreement-reached-on-carbon-border-adjustment-mechanism-cbam\/\">groundbreaking carbon tax on imports to the European Union<\/a> (EU), set to take effect this year, might contain some early answers. What\u2019s clear already is that a geographic approach will help executives understand the new law\u2019s implications for their companies."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Left","content":"<strong>Article snapshot:<\/strong> The rules and costs of cross-border trade are changing, and global manufacturing executives need a consolidated view of operations to guide strategic planning and investments.","snippet":""},{"acf_fc_layout":"content","content":"For global manufacturing firms, the policy shift highlights why executives need a consolidated view of operations to navigate a worldwide economy adapting to climate change.\r\n\r\nMany manufacturing firms already use a geographic information system (<a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/enterprise-technology-behind-big-business-decisions\/\">GIS<\/a>) to gain operational awareness of potential disruptions from <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/supply-chain-simulation\/\">extreme weather or knotted supply chains<\/a>.\r\n\r\nNow, the same technology could arm executives with the location intelligence needed to respond to bold new climate legislation.\r\n<h3><strong>Navigating CBAM and Future Climate Legislation<\/strong><\/h3>\r\nThe EU\u2019s Carbon Border Adjustment Mechanism (CBAM) is the first of its kind. The law is designed to ensure that companies and countries that sell products in EU nations factor greenhouse gas emissions into the price of their goods, just as bloc members do now.\r\n\r\nIn the EU, manufacturers must pay for each metric ton of carbon dioxide their operations emit beyond a set cap. CBAM will essentially place the same requirement on producers that import goods into the EU.\r\n\r\nUnder the current provisional agreement, CBAM\u2019s first phase will go into effect in October 2023 and require trade partners to collect and report data on carbon emissions, with the actual levy to come later. Current guidelines affect only the biggest carbon-emitting sectors\u2014cement, aluminum, electricity, hydrogen, iron, and steel\u2014as well as a few products upstream and downstream of these industries.\r\n<h3><strong>Mapping Climate Impacts onto Global Trade<\/strong><\/h3>\r\nFor businesses with geographically complex supply networks, a map that displays the country of origin and country of sale for various products, along with associated revenue, can help business leaders establish priorities and develop a plan. Location technology can also enable executives <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/the-business-executives-blueprint-for-sustainability\/\">to monitor sources of emissions<\/a> throughout the value chain."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Right","content":"<strong>A New Analyst\u2019s Role in the Supply Chain<\/strong>\r\n\r\nHear from analysts at GM and other companies about the role of location intelligence in the supply chain\u2014join <a href=\"https:\/\/www.esri.com\/en-us\/lg\/publications\/the-new-analyst-and-the-supply-chain-wherenext-webcast\"><em>WhereNext<\/em>\u2019s March 3 webcast<\/a>.","snippet":""},{"acf_fc_layout":"content","content":"In assessing CBAM\u2019s effects, business leaders will need to weigh the cost of the tariff against the cost of lowering carbon emissions, among other factors. With insights from spatial analysis, executives can identify the goods and trade routes that will be most affected by the new EU rules.\r\n\r\nFor instance, based on the <a href=\"https:\/\/www.esri.com\/en-us\/location-intelligence\">location intelligence<\/a> gleaned from GIS, a global manufacturing CEO might decide to close aging manufacturing plants with the highest rates of carbon emissions, or sell off legacy assets with poor energy efficiency. Alternately, the CEO might invest in carbon capture and storage (CCS) strategies to reduce emissions and decrease carbon exposure, <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/ira-business-implications\/\">as many oil and gas firms are now doing<\/a>.\r\n\r\nSome executives might determine that for the time being, paying the tariff is necessary until they can formulate a comprehensive plan to deal with climate impacts. The <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/think-tank-what-if-planning\/\">scenario planning capability<\/a> of location technology could help justify these decisions with data.\r\n<h3><strong>The Future of Carbon Regulation<\/strong><\/h3>\r\nIt's likely that the EU\u2019s pioneering legislation is a harbinger of things to come. In the US, a bill introduced by Senator Sheldon Whitehouse called <a href=\"https:\/\/www.whitehouse.senate.gov\/news\/release\/whitehouse-and-colleagues-introduce-clean-competition-act-to-boost-domestic-manufacturers-and-tackle-climate-change\">the Clean Competition Act<\/a> similarly aims to place a carbon tax on goods entering the country. Countries most impacted by CBAM, like <a href=\"https:\/\/www.chathamhouse.org\/2022\/12\/future-global-trade-changing-climate\">Turkey, Bosnia, and Herzegovina<\/a>, have begun changing practices to move toward decarbonization.\r\n\r\nAs carbon regulations become increasingly common, companies with an accurate, real-time accounting of where and how they produce emissions will have an important advantage over less-informed peers.\r\n\r\n&nbsp;\r\n\r\n<em>Photo by Olga Subach<\/em>"}],"references":null},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.9 (Yoast SEO v25.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>EU\u2019s Pending CBAM Rule Underscores Need for Global Awareness<\/title>\n<meta name=\"description\" content=\"Executives seek operational intelligence to analyze the implications of Europe\u2019s CBAM climate legislation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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