I saw this statistic this evening which highlights how expensive energy is in Europe with the top 4 countries on the list based in Europe. The UK's prices are crazy and way out of sync with the rest of the world and if you were a UK manufacturer the struggle is real as this is no level playing field.
COP 29 is currently taking place in Baku and the reason for this global conference is about negotiating carbo reduction and the costs or investments required to achieve their goals. We all know climate change is and has been a narrative for years even though many think it is a sham.
This week China, Brazil, India and South Africa were fighting against what they consider an unfair carbon tax looming over their exports when CBAM goes live in January 2026. For those that are not aware CBAM stands for the Carbon Border Adjustment Mechanism where countries exporting into Europe will be taxed according to how green that particular product is.
If you look back at the graph of the cost of electricity comparing these countries that are fighting the carbon taxes they do not have a leg to stand on. China is literally burning fossil fuels being nearly 9 x cheaper than the UK and only plan to change their carbon footprint by 2050.
The European countries will be paying for carbon credits for the carbon they emit from January 2026. The European products will produce less carbon compared to their imported rivals so in theory they will have the competitive edge. China and the other countries are fighting hoping that they can come to some compromise which would be unfair on European manufacturers.
The problem is everyone knew about CBAM way back in 2021 so they have had 5 years to get their manufacturing industry greener. Every trick in the book is being considered like moving manufacturing to developing countries who have less regulative carbon restrictions compared to other countries.
No one quite knows how this is all going to play out but it does look like China and India know they are in serious trouble when considering how big their exports are as part of their GDP. There is no hiding away from this as VeCarbon on the VeChain will be recording emissions for CBAM.
The last time China was facing a problem was with US sanctions and they moved their exports via Vietnam. This will not work this time and there is nowhere to hide.