Collection of Frequently Asked CBAM Questions by Korean Companies

CBAM, Frequently Asked Questions by Korean Companies

🌍 "Should we really prepare for the sudden carbon costs?”

The introduction of the Carbon Border Adjustment Mechanism (CBAM), which will impose real costs from 2026, has become a significant task for Korean companies exporting to the EU. It is expected to greatly impact industries with relatively high carbon emissions, such as steel, aluminum, cement, and fertilizers, emphasizing the importance of organic collaboration between relevant departments and data-based information management capabilities.

How will CBAM actually affect businesses?

The implementation of CBAM is expected to bring about the following changes in the business environment:

• ✅ Increased cost burden: Additional costs will incur upon entry to the EU market depending on the product's carbon emissions.
• ✅ Transparency in supply chain information required: As carbon emission information of imported products must be reported to the EU, an accurate data management system is essential.
• ✅ Uncertainty in cost prediction: The volatility in the prices of the European Emission Trading System (ETS) makes long-term predictions difficult.

This goes beyond simply impacting product prices and requires a reevaluation of overall business strategies and supply chain operations.

Were you aware of the reasons behind the introduction of CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is a system designed to ensure equity for domestic industries while the European Union promotes responses to climate change and transitions to a carbon-neutral economy. Within the EU, greenhouse gas emissions are already regulated through the ETS, but foreign products often enjoy a competitive price advantage due to relatively less stringent regulations. CBAM has been devised as a means to address these equity issues and drive decarbonization globally.

CBAM Preparation: Things You Must Consider 🤔

To respond to CBAM, companies should prepare the following aspects in advance:

• Ensuring carbon emissions calculation accuracy
  Companies must regularly calculate and report not only direct emissions from the manufacturing process but also indirect emissions from electricity used in production.

• Establishing a supply chain-based carbon information management system
  Systems should be set up for tracking and managing carbon emissions data from raw material procurement to finished product production.

Preparing for Carbon Emissions by Industry, Do It Like This 🧩

Industries subjected to initial CBAM application need more systematic and proactive responses.

Steel Industry

• Strengthen blast furnace emission management: Accurate measurement and monitoring of direct emissions from blast furnaces are crucial.
• Develop low-carbon production technologies: Future response strategies, including new technologies like hydrogen reduction steelmaking, are required.

Aluminum Industry

• Expand the use of recycled materials: Recycled aluminum offers the advantage of significantly lower emissions compared to new smelting.
• Increase the use of high-efficiency energy: Reducing consumption in high-energy processes like electrolysis can mitigate indirect emissions.

🛠️ Practical Strategies Proven on the Ground

🌍 "How can we effectively respond to CBAM?”

As CBAM involves a complex environment and regulations, it is vital to apply genuinely helpful strategies within the company. Multiple industries have validated the following strategies:

Implement an Accurate Carbon Emission Measurement System

A domestic steel company operates a company-wide emissions measurement system to respond to CBAM, managing carbon data by process in real-time. This system, a verified method, is regularly used for quarterly reporting.

• Specific approach recommendations
  → If developing in-house is challenging, collaborating with external companies specializing in system construction is a practical alternative. Companies like BK S&P with validated experience in system construction can assist in data management and meeting CBAM requirements.

Strengthen Cooperation with Supply Chain Partners

Transparent information sharing among supply chain members is key to CBAM response. Some companies in the steel industry have established regular communication channels with EU partners to manage the flow of carbon information from raw materials to processing.

• Specific approach recommendations
  → Establish an integrated reporting system through regular workshops with suppliers and importers and utilize third-party verification if necessary.

👥 Real Reviews from Those Who've Actually Used It

Experiences in CBAM response are being accumulated as valuable cases regardless of company size or industry group. The voices from the field provide insight into practical application strategies.

Noteworthy Cases from Experienced Stories

The Challenges of a Small and Medium-Sized Steel Company

A mid-sized steel company focused on internal awareness transformation by hosting company-wide explanation sessions on the system from the early stages of CBAM response. According to the CEO,

• "Despite the small structure, fast internal communication was actually an advantage in response.”
• "As understanding of the system increased, discussions on process improvement naturally followed.”

Transformation in the Fertilizer Industry

A small and medium-sized fertilizer company introduced an in-house technology development project to reduce emissions in the ammonia production process, proposing this solution to clients. Overseas clients provided feedback such as:

• "The provision of carbon reduction solutions is highly appreciated.”
• "An improvement in product image and a noticeable increase in credibility as a transaction partner are felt.”

---

💬 Have Any More Questions? We Answer Readers' Questions

Questions regarding CBAM from companies are diverse. We provide practical insights to practitioners focusing on frequently submitted questions.

Frequently Asked Questions

1. How do I purchase a CBAM certificate?
   The certificate must be purchased through the authorities of EU member states and can be purchased after the carbon emission calculation and reporting of imported products is completed. Prior system construction and data verification are necessary for this.

2. What products are likely to be added to the CBAM list?
   While not officially confirmed, according to EU Commission materials, there is discussion on expanding to include plastics, organic chemical products, and more.

3. What’s the first thing to do to reduce carbon emissions?
   System construction for measuring carbon emissions and improvement of high-emission processes should be prioritized. Understanding emissions is essential for establishing reduction strategies.

4. If I have already paid carbon-related costs in Korea, can I get a deduction on CBAM costs?
   Some countries allow deductions of existing internal carbon taxes or emissions trading costs to prevent double taxation, subject to EU authorities' recognition.

5. Which department should secure the internal personnel needed to respond to CBAM introduction?
   Cooperation among the Environmental Management, Business Strategy, Accounting, and International Trade departments is necessary, particularly in securing personnel specialized in carbon data management and EU regulatory response.

CBAM can be both a challenge and an opportunity for EU export companies. A comprehensive strategy is needed to turn the system from a risk into a tool for enhancing competitiveness through thorough preparation.
The Carbon Border Adjustment Mechanism (CBAM) emphasizes establishing medium to long-term strategies beyond short-term responses to secure sustainable competitiveness. Understanding the related systems and reporting structures based on the company’s characteristics is essential now.
If you have any queries regarding CBAM response, please feel free to contact BK S&P.