Insight

By Alexander Kolodzik, secretary general, European Fastener Distributor Association

It has now been a year since the European fastener industry found itself in the CBAM transition period and the sector is struggling with the challenges of the EU Carbon Border Adjustment Mechanism – with the reporting requirements for EU importers of fasteners increasing once again for Q3 of 2024.

The further complication for Q3 onwards is that EU importers can no longer use the European Commission’s default values for direct and indirect emissions for their quarterly report in the CBAM transition register. Instead, they must report the actual values of the emissions generated during the production of the imported fasteners. This poses major challenges not only for European fastener distributors, but for all participants in the supply chains – from any intermediaries to the manufacturers of the fasteners, as well as the suppliers of the raw materials used to produce the fasteners. According to CBAM, all parties are required to provide EU importers with data on emission values and other data so that EU importers can fulfil their legal reporting obligations according to CBAM. However, this is a huge endeavour that requires tremendous efforts from all parties involved. 

The European Fastener Distributor Association (EFDA) is making every effort to ensure European fastener distributors, and their business partners around the world, can meet these challenges as effectively as possible. It is clear that the EU CBAM regulation has been prepared too hastily and poorly, which is why the mechanism is completely inadequate and, in particular, unsuitable for downstream products such as fasteners, which have complex supply chains and thousands of parties involved around the world. It is also obvious that EU importers under CBAM are at a severe disadvantage compared to EU manufacturers of fasteners under the European Trading System (ETS), especially from 2026 when EU importers must buy CBAM certificates per tonne of emissions embedded in the imported goods. For this reason, EFDA is advocating for fasteners to be excluded from the scope of CBAM. However, that is not the issue at hand in this article. 

Currently CBAM still applies to EU fastener importers and as an association we are doing everything we can to support our members. That is why EFDA, with its members from the national member associations and companies, has set-up an EFDA CBAM Working Group – with a group of experts from distributor companies in various European countries. This team is doing an excellent job, which enables us to keep our industry informed about many aspects of CBAM and provide them with some useful documents and tools.

From the outset, we have kept our members informed about CBAM in webinars that we conducted together with the steel expert Andreas Schneider from StahlmarktConsult. We have also provided them with shorter and more detailed briefing documents that they can use to inform their suppliers that they, too, are affected by CBAM and how. This also applies to the many intermediaries who have to provide EU importers with CBAM data from the manufacturers they used to purchase the goods, an extremely difficult task.

Suppliers need to understand CBAM in order to obtain the data to be reported. This is a huge challenge for all parties involved, but especially for small and medium-sized companies around the world. The communication template created by the European Commission is far too extensive and complex for suppliers to use to report the required data to their customers in Europe. EFDA therefore created its own template very early on, which requests the necessary data in a clear and user-friendly way. Despite all our efforts, the number of suppliers that returned the template with specific emission values was only 12% a few months ago. 

Since specific emissions data must be reported from the third quarter of 2024, the EFDA CBAM Working Group, together with the consultancy Carboneer, has added an EFDA Calculator to the EFDA Template. The EFDA Calculator makes it easier for fastener manufacturers to calculate the data to be supplied for direct and indirect emissions. A new ‘EFDA guide for non-EU suppliers of fasteners subject to CBAM’ also provides information on the main hurdles of CBAM and highlights the most important aspects when completing the EFDA template. The EFDA guide has been prepared by Carbooner and the expertise of the members of the EFDA CBAM Working Group. We have also created a tutorial that guides users step by step through the EFDA template. Initial reports from our members confirm that the quantity and quality of the data reported by suppliers has increased since then.

Nevertheless, it remains extremely difficult to obtain the required information from all suppliers. EFDA and its member associations and companies will therefore continue to work to ensure that the enormous burden that CBAM places on our industry is lifted.