Recently, with the support of Carbon Newture, Shanghai Foreign Trade (Pudong) Co., Ltd., a subsidiary of Orient International (Holding) Co., Ltd., obtained a Conformity Assessment Report for the EU Carbon Border Adjustment Mechanism (CBAM) from TüV SüD, a leading third-party audit institution, for its CBAM-listed export products to the EU (CN code 7318). This marks the first publicly disclosed CBAM pre-verification audit case in China.
01 Background and timeline of CBAM implementation
The Carbon Border Adjustment Mechanism (CBAM), commonly referred to as the "carbon tariff," is a new policy officially implemented by the European Union (EU) in October 2023. Under CBAM, the EU imposes taxes on the carbon emissions of certain imported goods.
For Chinese manufacturers exporting CBAM-covered products to the EU, this means they will need to pay for the carbon emissions of their products according to CBAM regulations.
CBAM Implementation Timeline
May 17, 2023: CBAM legislation takes effect；October 1, 2023: Transitional phase begins, covering sectors such as cement, aluminum, fertilizers, steel, hydrogen, and electricity；January 1, 2026: Definitive phase begins；January 1, 2034: Full enforcement of CBAM, with the removal of free carbon allowances in the EU, requiring companies to pay the full cost of their carbon emissions.
CBAM tax costs depend on the difference between EU and Chinese carbon prices, the phase-out of free EU carbon allowances, and the carbon footprint of exported products. As of 2023, the EU’s average carbon price (83 Euro/ton) was significantly higher than China’s (68 CNY/ton). Even if companies have already paid carbon fees domestically, they will still need to cover the gap caused by price differences.
Given these discrepancies, precise carbon emissions calculation and reporting are the most effective ways for companies to manage CBAM compliance.
02 China’s first publicly disclosed CBAM pre-verification case based on actual data
The steel industry, one of the most energy-intensive sectors, is significantly impacted by CBAM. In 2023, steel products accounted for 58.4% of CBAM-covered imports into the EU, and China remains the largest steel supplier to the EU. Consequently, CBAM taxation will have a major impact on China’s steel exports.
Recently, Carbon Newture assisted Shanghai Foreign Trade (Pudong) Co., Ltd. in completing its CBAM reporting for steel products exported to the EU under CN code 7318. These products fall under the CBAM regulatory list, requiring greenhouse gas (GHG) accounting, specifically for CO? emissions.
Stricter CBAM Reporting Requirements
The transitional phase for CBAM will end in late 2025, and reporting requirements will become increasingly strict. Starting Q3 2024, companies will no longer be able to rely entirely on default values for emissions calculations, and complex products will only be allowed up to 20% estimated values. This makes collecting actual emissions data from supply chains crucial to avoid excessive carbon tax payments due to estimation inaccuracies.
To obtain precise CBAM data, companies must trace emissions data upstream—often several layers deep into the supply chain. The further upstream the data source, the weaker the reporting company's control, making data collection significantly more challenging.
In this case, Carbon Newture successfully helped Shanghai Foreign Trade (Pudong) gather real production data from manufacturing processes such as heading, threading, and packaging while also tracing emissions data further up the supply chain.
TüV SüD Compliance Assessment
The CBAM reporting documents submitted for this case were reviewed and validated by TüV SüD, a globally recognized third-party auditing body. As a result, Shanghai Foreign Trade (Pudong) successfully obtained a CBAM pre-verification compliance assessment report, making this the first publicly disclosed CBAM pre-verification case in China based on actual data.
This achievement highlights Shanghai Foreign Trade (Pudong)’s leadership in understanding international trade regulations, tackling green trade barriers, and enhancing its global market competitiveness. It also showcases Carbon Newture’s expertise in supporting clients with CBAM compliance, green trade risk management, and carbon footprint reduction.
03 Building a Low-Carbon Steel Supply Chain: Cross-Border Carbon Data Compliance is Urgent
For steel manufacturers and downstream product companies subject to CBAM reporting, accessing accurate carbon data requires tracing emissions to upstream suppliers. Consequently, CBAM will also impact upstream enterprises, as they will need to cooperate in data collection and prioritize lower-carbon materials to remain competitive. Upstream suppliers must collaborate with downstream buyers to share emissions data safely and transparently. Low-carbon precursor materials will be preferred, as companies facing high CBAM taxes will seek to reduce their carbon footprint by sourcing materials with lower embedded emissions.
As carbon data becomes a strategic resource for global economies, cross-border carbon data transfer is increasingly significant. Given China’s strict data security policies, ensuring compliance and secure cross-border carbon data sharing has become a priority for businesses. For example, the “Carbon Data Cross-border Green Channel”—a pilot initiative launched by the Lingang Special Area Administration and Carbon Newture—has provided a secure and compliant pathway for companies to manage and transfer carbon data internationally.
Beyond CBAM compliance, robust carbon data management strengthens China’s steel industry database, improves carbon data quality, and facilitates coordinated emissions reduction across supply chains. This supports China’s dual carbon goals while enhancing its global competitiveness.
Whether to navigate CBAM regulations or to align with China’s carbon neutrality strategy, collaborative decarbonization across supply chains is inevitable. Companies at every stage of the supply chain can benefit from carbon footprint calculations and organizational carbon inventory assessments to identify emission hotspots, explore reduction opportunities, and achieve long-term low-carbon transformation.
