How EU’s CBAM Reshapes China’s ICT Landscape?

Ripple effect and future scope demand urgent action from China’s tech giants.

Critical vulnerability for ICT lies in embedded materials - aluminum for casing, heat-sinks, steel for infrastructure, electricity for semiconductors and batteries. As CBAM potentially expands to cover downstream products, direct inclusion of complex goods like electronics become a plausible future scenario.

CBAM cost pass through

Material supplier cost escalation - ICT manufacturers will face passing on CBAM compliance fees.

Upstream Carbon Accounting - ICT companies must gain unprecedented visibility into the embedded carbon of their upward supply chain with carbon accounting. The cost of materials and carbon accounting will also need to end up with either ICT companies or manufacturers.

Why is China’s ICT vulnerable? The CO2 is embedded deep in the supply chain

In upward supply chains scope 3 carbon emissions account for majority of emissions. If we are talking about energy for semiconductors, materials like aluminum for casings, plastics and steel components or batteries - the complexity of supply chains make it hard to track carbon emissions across tiers. Imagine tracking down all the tiers in the supply chain for batteries, all the way to lithium mines.

The ripple effect

Price increase - Suppliers of CBAM-covered materials will raise prices. On the flip side, EU buyers will favour low carbon suppliers. Any failure to demonstrate decarbonisation will harm supplier brand value and risk of procurement switch to other suppliers. There is also market access risk where future policies may demand proof of low carbon footprint.

Strategic actions

Map and measure: Invest in granular product LCA & supply chain carbon accounting.
Engage suppliers: Demand transparency, collaborate on decarbonisation roadmaps.
Decarbonise energy: Renewable, PPA, energy efficiency
Embrace circularityL Design fro longevity and recycling, use of recycled materials, reduce volume of materials.
Align policy: Engage with China’s ETS development and international standards

The future is low-carbon

Centre for Excellence in Sustainability help EU companies and suppliers to the EU navigate CBAM and risks to their business. Our international team of experts help you:

Develop robust carbon accounting and LCA capabilities
Formulate supply chain decarbonisation strategies
Identify clean energy and circularity opportunities

Building resilience

CBAM is harbinger of global carbon pricing trends
Decarbonisation is future-proofing
Building resilient, transparent supply chain
Position your brand as a leader in sustainability
ICTs from Europe have or will have sustainable procurement practices implemented, making it mandatory for suppliers to be carbon ready.

Navigating Carbon order Storm - CBAM & China’s ICT sector