CZ/SK verze

The introduction of a carbon duty will help European companies compete against China

The introduction of a carbon duty will help European companies compete against China
photo: Archives/Railway
18 / 04 / 2022

In mid-March, EU countries agreed on the carbon tariff introduction, through which products with high emissions affecting rail freight carriers will be imported for a certain fee. Without this tariff, carriers would transport fewer raw materials due to competition, which would affect economic results.

We are talking about the production of iron, steel, aluminum, cement, and fertilizers. European manufacturers are at a huge disadvantage compared to Asian countries, which do not pay for carbon dioxide emissions. For example, China is the largest producer of crude steel worldwide, with 54% of global production in 2021. Consequently, if there is no carbon tariff, European producers will be doomed to reduce steel production, which will affect their economic success.

"Cheaper Chinese steel is more competitive with European production, as we saw in 2019 when EU steel production dropped significantly due to excessive imports. Lower production automatically means lower raw material supplies, which is also felt by ZSSK CARGO, which has historically depended on supplies for the steel industry," said Roman Beno, chairman of the board of directors of Slovakia's state-owned freight carrier.

On the one hand, according to the economic models developed so far, with the introduction of this tariff, the Slovak industry, for example, could increase production by 10 percent. On the other hand, there are fears of a trade war on this basis, which would hurt exporters to Asian markets and the United States.

These decisions are being considered as part of a green course that the European Commission unveiled in December 2019 under ambitious plans to become the world's first climate-neutral continent by 2050. It contains a plan of action to stop climate change, reduce pollution, and prevent biodiversity loss. By transitioning to a clean and circular economy, Europe intends to use resources more efficiently.