The European Parliament has voted to formally approve the EU's carbon Border Adjustment Mechanism (CBAM), which will go into trial operation in October and be fully implemented in 2026. This means that the world's first carbon import tax will soon be implemented. So will the implementation of the carbon tariff affect the textile industry? How should companies respond? For a time, this topic in the industry caused greater concern.

The impact is small

But the future is still a "green threshold"

Carbon border regulation Mechanism (CBAM) refers to countries or regions that strictly implement carbon emission reduction policies, requiring the import (export) of high-carbon products to pay (return) corresponding taxes or carbon quotas. Commodities covered by CBAM include iron, steel, cement, aluminium, fertiliser, electricity, hydrogen and, under certain conditions, indirect emissions. Those who import these goods pay the difference between the carbon price in the producing country and the price of carbon allowances in the European Union's Emissions Trading system.

Wu Bixuan, a carbon tariff expert and senior partner of Haihua Yongtai (Beijing) Law firm, said in a previous lecture that the EU's carbon tariff (CBAM) measures have attracted increasing attention in China. In addition to the major industries explicitly covered by carbon tariffs, other domestic industries are also starting to look at how the measure might affect them. One of the more representative is the textile and photovoltaic industry.

Wu Bixuan analyzed that from the starting point of the carbon tariff policy, the reason for the EU to implement the carbon tariff is to prevent "carbon leakage" -- that is, in order to avoid the high carbon emission cost within the EU, EU enterprises transfer production to countries with relatively loose emission reduction measures (that is, industrial relocation). So, in theory, carbon tariffs focus only on industries that are at risk of "carbon leakage", that is, those that are "energy intensive and trade exposed" (EITE).

The Commission's official list of industries at risk of "carbon leakage" currently includes 63 economic activities or products, of which the following are related to textiles: "preparation and spinning of textile fibres", "manufacture of non-wovens and their products, except clothing", "manufacture of man-made fibres" and "finishing of textile fabrics".

In general, compared with steel, cement, ceramics, oil refining and other industries, textile is not a high-emission industry. Even if the scope of carbon tariff is expanded in the future, it will only affect fiber and fabric, and it is likely to rank behind oil refining, ceramics, paper and other industries.

Plan for a rainy day

Be prepared to cross the "green threshold"

In interviews, many experts and entrepreneurs believe that the textile industry will not be directly affected in the first few years after the carbon tariff is implemented. However, this does not mean that textile exports will not encounter the green barriers of the European Union. The measures being developed by the EU under the policy framework of its Circular Economy Action Plan, in particular the Sustainable and Circular Textiles Strategy, should attract the attention of the textile industry. It indicates that textile must pass a "green threshold" to enter the EU market in the future.

Wu Bixuan explained in his lecture that there are two main tools in the EU's "green trade toolbox", one is carbon tariff, the other is the "circular economy action plan". The EU uses different tools for different industries. For primary products with high energy consumption and high emissions, the EU uses carbon tariffs as a tool. For other "non-carbon tariff-covered industries" (such as photovoltaic, textile, battery and other processed products), the EU weaves a net of "green" rules under the framework of the "circular Economy Action Plan" policy.

Hu Kehua, deputy director of the social responsibility office of the China National Textile Industry Council, agrees. He believes that the EU's sustainability requirements for textiles are strategic and systematic, so the EU list's carbon leakage in the textile sector will be judged and traced through appropriate tools such as product environmental footprint disclosure (PEF) and product digital passports. For Chinese enterprises entering the EU textile supply chain, on the one hand, it is necessary to establish the data-based carbon management mechanism of enterprises and products as soon as possible, find out the background and reasonably plan the carbon reduction path, but attention should be paid to the bottleneck effect caused by the difference between the carbon reduction target of the international supply chain and the double carbon target of China.

The landing of the carbon tariff bill has also attracted the attention of many enterprises. He Jianli, general manager of Zhejiang Beauty New Materials Co., LTD., introduced that 15% of the orders of Beauty New Materials come from the European Union. Although the enterprise has not received any impact at present, it is necessary to see that the world around the carbon emission policy game, the rules of the competition has begun. The EU's "carbon tariff" policy has put this competition on track. We should also be aware that in the future, around the concepts of carbon emissions and green development, we need to build carbon trading markets and carbon pricing mechanisms that are as close to international standards as possible.

Wang Zunyuan, general manager of Qingdao Xinwei Textile Development Co., LTD., is also very concerned about the imposition of carbon tariffs. He believes that the carbon tariff is inevitable in the future, the implementation of the law is generally good for society, we must read the situation, improve ourselves. It is understood that recently Qingdao Xinwei has been united with a number of domestic enterprises, on the carbon footprint and other issues to carry out a lot of work, the purpose is to prepare for a rainy day, to provide support for the EU brand.

Do a good job in compulsory courses

Explore greater space for development

In fact, no matter whether the EU imposes carbon tariffs or not, carbon reduction is a compulsory course for industrial enterprises if they want to go further. Fortunately, China's textile industry, which has always been in the forefront, proposed as early as five years ago to promote the industry to achieve a zero-carbon industry by 2050. As a leading unit, China National Textile Industry Council has taken the lead in mobilizing awareness and building capacity for industrial climate action in China and even the world. On June 1, 2021, China Textile Association officially launched the "30·60 Accelerated Plan for Climate Innovation and Carbon Neutrality of Chinese Fashion Brands". Now, a number of industry leaders, brands and industrial clusters have joined it to jointly promote the sustainable development of the textile industry. In particular, in the 2023 group standard project plan of China Textile Association, the key directions also cover green and low carbon, focusing on double carbon goals and key tasks, and studying carbon labeling, carbon accounting and verification, low-carbon technology and equipment, green and low carbon evaluation and management standards. The industry will speed up the formulation of carbon footprint product category rules and standards in the textile segment.

Zhejiang Beauty New Materials has been grinding for ten years, with the mission of "creating low-carbon regeneration, leading green fashion and caring for ecological home", adhering to the concept of "high quality, brand, recycling and differentiation", through the research and development of new technology, the waste clothing fabrics and other polyester products are reborn, and realize the recycling cycle, from clothing to clothing to achieve a sustainable cycle. To become a global leader in green recycled polyester is of great significance for energy double carbon control to achieve peak carbon neutrality.

As early as 2009, Qingdao Xinwei started the action of carbon neutrality and carbon peak. In 2017, in collaboration with Professor Zhang Dasheng from Beijing Institute of Fashion Technology, the iterative polyester was developed from the production of slicing, fiber processing, finished dyeing and other aspects, which achieved a comprehensive energy-saving effect of more than 20% compared with conventional polyester. Now the iterated polyester has been widely used, and has made a certain contribution to promoting the development of double carbon industry.

Carbon reduction is a compulsory course, but also a huge business opportunity. We hope that enterprises in the industry can take the initiative to layout as soon as possible and find a newer and bigger development space on the road of carbon reduction.

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