Core Viewpoint - The article discusses the implementation of the Carbon Border Adjustment Mechanism (CBAM) by the EU to address carbon leakage and its implications for steel importers, highlighting the need for strategic adjustments in procurement and production methods to mitigate potential cost impacts [1][9]. Group 1: CBAM Implementation and Challenges - The CBAM was introduced to combat carbon leakage by imposing carbon pricing on imports linked to the EU Emissions Trading System (ETS) [1]. - The mechanism will be implemented in two phases: a transitional phase from October 2023 to December 2025, where reporting is required but no taxes are imposed, followed by a full implementation phase starting January 2026 [1]. - During the transitional phase, challenges have emerged, particularly for small importers, leading to the introduction of a minimum threshold of 50 tons to exempt approximately 90% of importers from detailed reporting requirements [1]. Group 2: EU Steel Import Dependency - The EU is the largest importer of semi-finished and finished steel, accounting for 35% of global steel imports, with dependency on imports rising from 17% in 2020 to an expected 21% in 2024 [4]. - Steel import volumes are projected to grow at an annual rate of approximately 0.63% from 2026 to 2030 [4]. Group 3: Impact of CBAM on Steel Importers - CBAM is forcing EU steel importers to reassess their procurement strategies and the production technologies used by suppliers to manage cost impacts [6]. - The top ten countries supplying steel to the EU account for 69% of total imports, with China, Turkey, Russia, and India contributing over 60% [6]. - The two main production pathways for steel are the Blast Furnace-Basic Oxygen Furnace (BF-BOF) and Electric Arc Furnace (EAF) methods, with EAF having significantly lower CO2 emissions [6]. Group 4: Expected Cost Implications of CBAM - Although the fixed carbon price for 2026 has not been announced, it is expected to be linked to the EU ETS carbon price, projected to rise to €85 per ton in 2026 and drop to €65 in 2027 due to potential oversupply [10]. - The implementation of CBAM could lead to an additional carbon tax of €2.21 billion to €2.7 billion for EU steel imports in 2026, with BF-BOF steel imports contributing the majority of this cost [12]. Group 5: Strategies for Mitigating Financial Impact - EU steel importers need to act quickly to mitigate potential cost impacts from CBAM by evaluating the specific effects on their supply chains and the maturity of suppliers' emissions reporting [14]. - Short-term strategies include close communication with suppliers to encourage cleaner steel production and incorporating carbon metrics into procurement processes [14]. - Long-term strategies may involve reconfiguring supply chains to prioritize regions with lower carbon production methods, potentially reducing CBAM-related costs significantly [14]. Group 6: Global Exporters' Response - Global exporters supplying the EU are also taking measures to decarbonize their production methods to remain competitive, with initiatives in countries like India and China aimed at improving energy efficiency and reducing emissions [17][18]. Group 7: Opportunities During the Transition Period - The transition period provided by CBAM offers time for proactive supplier collaboration, investment in cleaner production, and integrating carbon considerations into procurement decisions, which can help manage financial risks [20].

Core Viewpoint - Bosnia and Herzegovina's parliament has taken a significant step towards aligning with EU energy market rules by passing the draft law on electricity regulation, transmission, and market, which is essential for establishing an electricity exchange [1] Group 1: Legislative Developments - The draft law aims to achieve coordination with EU regulations, which is a condition for Bosnia to be exempt from the EU's Carbon Border Adjustment Mechanism (CBAM) [1] - If Bosnia fails to obtain this exemption, it could face taxes on exports to the EU starting next year, potentially resulting in losses of up to several billion marks [1] Group 2: Market Structure and Efficiency - The establishment of an electricity exchange is intended to enhance the efficiency and fairness of the electricity sector by replacing closed bilateral agreement pricing with prices formed through public supply and demand [1] - The exchange will facilitate connections with surrounding markets, improve energy stability, and open doors for increased exports and better integration into the European energy system [1] Group 3: Location and Development - The proposed headquarters for the electricity exchange will be in Mostar, continuing the practice of balanced distribution of electricity sector institutions across the country [1] - Current locations of key operators include the transmission operator in Banja Luka, the system operator in Sarajevo, and the national regulatory commission in Tuzla, with the choice of Mostar promoting balanced development throughout Bosnia [1]

Core Insights - The global carbon market experienced a significant rebound in trading volume, increasing by 24% compared to the stagnation in 2023, although the transaction value only slightly rose by 0.3%, indicating a decoupling between trading volume and transaction prices [1]. Group 1: Market Overview - The EU carbon market remains dominant, accounting for 85% of the total transaction value in major global carbon markets, but its transaction value decreased by 2% year-on-year due to lower carbon prices influenced by falling natural gas prices [3]. - Geopolitical tensions in regions like Ukraine and the Middle East, along with increased winter risk premiums, led to heightened carbon price volatility in the fourth quarter of the previous year [3]. - In the U.S., the California-Quebec market initially performed well but later faced volatility due to policy uncertainties, while the Regional Greenhouse Gas Initiative (RGGI) saw rising auction demand and prices [3]. Group 2: Regional Highlights - New Zealand's carbon market saw a remarkable trading volume increase of over 300% year-on-year, attributed to the resumption of auctions and heightened market activity, with an average carbon price of approximately NZD 64 per ton [4]. - China's national carbon market entered its third compliance period in 2024, with increased market activity and improved policies, including the expansion of mandatory carbon markets to cover industries like steel and cement [6]. - Japan's Tokyo Stock Exchange carbon credit market experienced strong growth since its launch in October 2023, with plans to transition to a mandatory carbon market by April 2026 [6]. Group 3: Voluntary Carbon Market Challenges - The voluntary carbon market faced significant challenges in 2024, with both prices and trading volumes plummeting; GEO contracts fell by 75%, reaching a historical low price of 15 cents [7]. - Higher-quality emission reductions, such as those meeting CORSIA Phase 1 requirements, maintained relatively stable prices, averaging USD 15.50 per ton [7]. - The outlook for 2025 appears optimistic, contingent on governance reforms and enhanced connections with compliance markets, with efforts underway to improve the credibility of the voluntary carbon market [7].