CBAM and China: EUR 18B in Annual Export Exposure
China faces the largest absolute CBAM exposure of any country — an estimated EUR 18 billion annually across steel, aluminium, and cement. The Chinese national ETS provides a partial offset for some manufacturers. This guide explains how the Chinese ETS deduction works and what Chinese exporters must do.
China CBAM Exposure by Sector
| Sector | Key companies | EU export volume | Estimated annual CBAM liability at default |
|---|---|---|---|
| Steel (BF-BOF dominant) | Baowu, HBIS, Ansteel, Shougang | 500,000–1,500,000 t/year | EUR 71–214M |
| Aluminium (primary — coal) | Chalco, Hongqiao, Xinfa | 200,000–500,000 t/year | EUR 162–406M |
| Cement | CNBM, Anhui Conch, CR Cement | 100,000–300,000 t/year | EUR 5–23M |
Chinese ETS Deduction: How It Works
The China ETS (launched 2021, expanded to steel, aluminium, cement in 2024) covers the sectors most exposed to CBAM. Chinese manufacturers paying China ETS compliance costs may be eligible for a CBAM deduction under Article 9 of Regulation 2023/956. The deduction is approximately EUR 10/tCO2 on verified actual emissions — reducing the net CBAM cost from EUR 65.42/tCO2 to EUR 55.42/tCO2.
The deduction requires: (1) verified documentation of China ETS compliance costs, (2) verified actual embedded carbon values, and (3) coordination between the Chinese manufacturer, their EU importer, and a CBAM verifier. This is complex — but for large exporters, the EUR 10/tCO2 deduction on millions of tonnes is significant.
Chinese Primary Aluminium: When to Use Default Values
Chinese primary aluminium producers using coal-heavy grids (grid factor 0.58–0.80 tCO2/MWh) typically achieve actual embedded carbon of 14–18 tCO2/t — above the 12.40 default. For these producers, using the default value is advantageous. However, producers in hydro-rich regions (Yunnan, Sichuan) with actual emissions of 4–6 tCO2/t benefit significantly from documenting actual values.
Frequently Asked Questions
What is China's total annual CBAM exposure?
China's annual CBAM exposure is estimated at EUR 18B+ across steel, aluminium, and cement — the largest of any country.
Does China's ETS offset CBAM costs?
Partially. China's ETS price (approximately EUR 10/tCO2) may qualify for CBAM deduction under Article 9 — but only with verified documentation of ETS compliance costs.
Should Chinese primary aluminium producers use default or actual values?
Producers in coal-heavy regions (actual 14–18 tCO2/t) should use the 12.40 default. Producers in hydro-rich regions (actual 4–6 tCO2/t) benefit significantly from documenting actual values.
What is China's grid emission factor for CBAM?
China's national average grid emission factor is approximately 0.58 tCO2/MWh. Regional factors vary: coal-heavy northern provinces are higher; hydro-rich Yunnan and Sichuan are lower.
Where can Chinese manufacturers find ISO 14065 accredited CBAM verifiers?
See the China verifier directory at /verification-directory/china/ for CNAS ISO 14065 accredited CBAM verification firms.
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