Core Insights - The EU's Carbon Border Adjustment Mechanism (CBAM) will fundamentally alter the economic logic of global trade starting January 2026, impacting metal suppliers and buyers by exposing direct and immediate costs related to carbon emissions [1][6] - Carbon intensity will become a core factor determining market access, profit margins, and cost structures, shifting the focus of corporate strategies towards carbon management [1][5] Cost Implications - CBAM will impose carbon costs based on embedded emissions for products like steel, aluminum, cement, fertilizers, electricity, and hydrogen, linked to the EU Emissions Trading System (EUA) prices [7] - As free allowances are phased out, the obligation will increase annually until full implementation in 2034, with EUA prices expected to rise from approximately €70-75 per ton in 2025 to about €130 by 2030 [2][7] - By 2034, carbon costs are projected to represent a significant portion of the import value for most CBAM-covered products, reshaping the cost competition landscape [2][7] Sector-Specific Impacts - The steel industry is expected to bear about 75% of the potential CBAM liabilities, with high-emission steel importers facing additional costs of €40-60 per ton when EUA prices reach €90 in 2026 [3][8] - Aluminum importers may incur burdens close to €500 million in 2026, potentially escalating to €4.7 billion by 2030 if indirect emissions from electricity are included [3][8] Regional Exposure and Trade Risks - CBAM's impact will be concentrated, with over half of the costs expected to arise from major exporting countries like India, Turkey, and Russia, with India alone projected to bear 18% of total CBAM costs [4][9] - This concentration of responsibility indicates a shift in supply chain risks from cost-related to regional and structural risks, necessitating a reevaluation of supply chain strategies [4][9] Strategic Guidance for Enterprises - CBAM represents not just a compliance mechanism but a systematic framework extending the EU's carbon pricing to global trade, making carbon emissions a real cost on financial statements and a decisive variable in business strategies [5][10] - The report "Margins on the line" provides quantitative insights for decision-makers in the metals supply chain, helping to transform regulatory risks into actionable strategies [10]

Core Viewpoint - The new "Energy-saving and New Energy Vehicle Technology Roadmap 3.0" outlines the development blueprint for China's automotive industry towards 2040, emphasizing low-carbon, electrification, and intelligence as key directions for growth [1][2]. Group 1: Future Development Directions - The automotive industry in China is set to focus on "low-carbon, electrification, and intelligence," with a significant enhancement in global competitiveness by 2040, positioning itself among the world's leading automotive powers [2]. Group 2: Expected Technological Breakthroughs - Intelligent connected vehicles are expected to enter a rapid market development phase within the next 5 to 15 years, with high-level autonomous driving vehicles achieving large-scale application. Solid-state batteries are anticipated to see small-scale application by 2030 and large-scale global promotion by 2035 [3]. Group 3: Environmental Key Indicators - A new key indicator for carbon emission intensity has been introduced, aiming for a 60% reduction in average carbon emission intensity of passenger vehicles by 2040 compared to 2024. This shift indicates a broader evaluation of environmental impact, focusing on carbon metrics rather than just energy consumption [4]. Group 4: Future Vehicle Composition - The future automotive landscape will not see a complete replacement of fuel vehicles by new energy vehicles; instead, a "coexistence" of oil and electricity is expected. By 2040, the penetration rate of new energy passenger vehicles is projected to exceed 85%, with pure electric vehicles (BEV) accounting for 80%. Internal combustion engines will still play a significant role, with their sales proportion in new passenger vehicle sales remaining around one-third [5][6].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The aviation industry accounts for approximately 3% of global carbon emissions, equating to about 1 billion tons of CO2 equivalent annually, with a target set for significant reductions in carbon intensity by 2050 [4][6] - Sustainable Aviation Fuel (SAF) and hydrogen are identified as primary fuel sources for commercial aviation, with SAF being a promising option for decarbonization [4][5] - The report emphasizes the importance of policy measures and regulatory frameworks to drive the adoption of low-carbon fuels in the aviation sector [4] Summary by Sections Sustainable Aviation Fuel (SAF) - SAF has been developed through various processes, with Honeywell's Ecofining™ technology being a notable method that converts 11 types of biomass into renewable fuels [5][10] - The availability of feedstock for SAF production is currently limited, but future advancements in agricultural practices and new production routes like ethanol-to-jet (ETJ) and biomass-to-liquid (BTL) are expected to meet increasing demand [16][17] Carbon Emission Intensity - The carbon intensity (C.I.) of SAF varies significantly based on production routes and feedstock types, with traditional jet fuel having a C.I. of approximately 85-95 g CO2e/MJ, while ETJ can range from 24-78 g CO2e/MJ [20][22] - The report highlights that using sugarcane or forestry residues for SAF production can achieve lower C.I. compared to corn-based SAF [21][25] Infrastructure Reuse - SAF can utilize existing infrastructure for transportation and distribution, making it a more immediate solution for airlines compared to hydrogen, which requires significant infrastructure investment [29][30] - Refining facilities can be repurposed to produce SAF, providing a cost-effective transition for the industry [29] Structural Price Advantages Compared to Hydrogen - The report discusses the cost structure of renewable hydrogen production, which is heavily influenced by electricity prices, and suggests that SAF may currently be more economically viable [31][34] - Renewable hydrogen's production costs are projected to decrease as technology advances, but current costs remain higher than those for SAF [34][35] Inelastic Demand for Air Travel - Historical data indicates that high fuel prices do not significantly reduce passenger numbers, suggesting that airlines can pass on costs to consumers without drastically affecting demand [37][38] - The report notes that consumer willingness to travel remains strong, with a significant percentage of potential travelers expressing a desire to travel as much or more than before the pandemic [37][40] Market Development Milestones - The report outlines key milestones for the adoption of SAF and renewable hydrogen, including policy incentives and infrastructure investments, with a target of 5% SAF adoption by 2030 and 20% by the mid-2030s [53][54] - The current capacity for hydrogen production is insufficient to meet future aviation fuel demands, highlighting the need for further investment in infrastructure [54][55]