Business Diplomacy 13

WHAT IS THE CARBON BORDER ADJUSTMENT MECHANISM (CBAM)? Commonly referred to as carbon tax, CBAM is a mechanism whereby a financial provision proportional to the amount of greenhouse gas emissions generated during the production and import processes of goods imported into the EU is charged to the relevant exporter. Through CBAM, it is aimed to prevent carbon leakage and to compensate for the disadvantageous competitive environment that may occur due to taxation within the borders of the Union by means of an international, reliable, and transparent mechanism. It is known that the CBAM will be structured over an Emission Trading System (ETS) that has been subjected to reform in line with the WTO, and that the mechanism will cover all product and commodity imports to the EU. It is stated that following an impact analysis study to be completed by 2023, the implementation will start with energy-intensive industries such as cement, steel, aluminium, petroleum refinery, paper, glass, chemicals and fertilizers, and the energy industry in particular. WHICH FINANCIAL RESOURCES WILL BE USED FOR THE CHANGES TO BE REQUIRED BY THE EUROPEAN GREEN DEAL? Along with the EGD, an Investment Plan for the financing of the change and the Just Transition Mechanism has been announced. The Investment Plan will mobilize at least € 1 trillion over the next 10 years to support sustainable investments through the EU budget and relevant instruments such as InvestEU in particular. The Just Transition Mechanism will focus on the social and economic costs of transition in disadvantaged and vulnerable areas, and it will finance projects ranging from the creation of new jobs to financial support for companies, job seeking, and reskilling for new job seekers due to the transition. Within the scope of these financing plans designed mainly for EU member countries, it is anticipated that financing opportunities will be created to support the transformation of third party countries that have close relations with the EU. In this context, Turkish companies may find opportunities to benefit from EU financing. WHAT KIND OF CHANGES ARE FORESEEN FOR THE INDUSTRIES WITH THE EUROPEAN GREEN DEAL? The transformation process to be experienced within the scope of the EGD covers all industries of the economy. The fact that industries such as transportation, industry, agriculture, and energy production are responsible for the significant share of greenhouse gas emissions puts these industries in a higher priority position for the steps to be taken. The financial sector, on the other hand, is among the industries that will play an active role in this regard with its power to direct private capital to more sustainable investments. Some sectors that are expected to change with the Deal and the scope of these changes are as follows: Construction: Compliance of the design of newly built and renovated buildings with the requirements of the circular economy at all stages, digitalization of the building stock, and strengthening against the effects of climate change will be encouraged. Sustainability performance will become a requirement for the public tenders, material recovery targets will be set for construction and demolition wastes in the EU legislation, and initiatives for sustainable and cyclical use of construction lands will be encouraged. The use of secondary raw materials with recycled content in construction will become a requirement. Electronic materials: Regulations will be introduced for designing electronic devices to be energy-efficient, durable, repairable, reusable, and recyclable. A standard will be developed for the collection and improvement of old electronic equipment. Regulatory measures will be taken, including the application of common chargers, increasing the lifetime of charging cables, and separating the purchase of chargers from the purchase of new electronic devices. Textile: Sustainable production, sustainable lifestyles, presence of hazardous materials, and improvement of textile waste collection and recycling will be prioritized. Green public tenders are expected to increase along with the reuse and recycling efforts in the EU. Food, water, and other nutrients: Regulations will be introduced regarding the reuse of wastewater and water efficiency. In the food sector, changes with the aim of ensuring food safety, managing natural resources in a sustainable manner, reducing dependence on non-renewable and non-sustainable resources, and adapting to climate change will be introduced. 3 5 4