A New Era of Trading
Global trade is entering a new phase. Climate policy is increasingly shaping how goods move across borders, particularly for emissions-intensive industries such as steel. The European Union’s Carbon Border Adjustment Mechanism (CBAM) signals this shift clearly. Designed by the European Commission to equalise carbon costs between EU-produced and imported goods, CBAM aims to prevent carbon leakage, where production shifts to regions with weaker climate policies. As the mechanism moves from policy design into implementation, it is changing how steel producers engage with international markets. For steel companies, competitiveness is no longer defined solely by scale or cost efficiency. Carbon performance is becoming a measurable factor in market access and buyer decision-making.
Why CBAM Matters for Steel
Under CBAM, importers of carbon-intensive products such as steel are required to disclose the embedded emissions associated with their goods, in line with methodologies defined by the European Commission. As the mechanism progresses from its transitional phase toward financial enforcement, these disclosures will be increasingly linked to the EU’s carbon pricing framework, reflecting the policy direction set by both the European Commission and the European Parliament. For steel producers, the implications extend beyond compliance. CBAM places greater emphasis on verified emissions data, traceable production processes, and consistent reporting methogologies. Companies that have already invested in measurable emissions reduction and transparent reporting are better positioned to respond as carbon performance becomes increasingly central to trade competitiveness.
AGSI: Anticipating the Shift
Arabian Gulf Steel Industries began aligning its operations with this emerging reality well before CBAM entered its implementation phase. In 2024, AGSI’s Abu Dhabi steel plant achieved carbon neutrality under the PAS 2060 standard, with greenhouse gas emissions independently verified by DNV. This milestone reflects a long-term approach to decarbonisation grounded in measurable performance rather than future pledges. AGSI’s production model is built on the use of 100% locally sourced recycled steel, reducing dependence on carbon-intensive raw materials while supporting circular resource flows. Together, verified carbon management and circular sourcing place AGSI in a strong position as trade mechanisms increasingly prioritise auditable emissions data and low-carbon production practices
Traceability and Transparency as the New Standard
CBAM reinforces a broader shift toward traceability and transparency in global trade. Under the framework set out by the European Commission, producers are expected not only to reduce emissions, but to clearly demonstrate where those emissions originate and how they are calculated, supported by robust and auditable data. AGSI has focused on embedding traceability into its operations, supported by third-party certifications and verified disclosures that provide confidence to customers, regulators, and other stakeholders. As access to regulated markets becomes increasingly linked to the credibility of emissions data, transparent reporting is no longer optional. It is emerging as a prerequisite for participation in carbon-constrained trade environments.
Innovation Driving Decarbonisation
Beyond regulatory alignment, AGSI continues to integrate energy-efficient technologies and process optimisation across its operations, contributing to lower carbon intensity and improved operational efficiency. The company also engages in collaborative industry initiatives aimed at accelerating decarbonisation within the steel sector. This combination of operational discipline and sector-level collaboration reflects an understanding that long-term competitiveness will increasingly depend on credible carbon performance, operational resilience, and the ability to adapt as climate expectations evolve.
Future-Proofing for Global Trade
CBAM is widely viewed as a precursor to broader climate-linked trade measures, with similar mechanisms expected to expand across products and jurisdictions over time. As carbon-based trade requirements evolve, steel producers with verified low-carbon performance and established emissions reporting systems are likely to gain a structural advantage in international markets. AGSI’s integrated approach, combining recycled inputs, certified carbon neutrality, transparent reporting, and ongoing operational improvement, positions the company to navigate this evolving landscape with resilience. As international trade increasingly reflects carbon performance, the ability to demonstrate credible, measurable sustainability outcomes will play a defining role in how steel producers compete and grow.
References
Steeltimes International (2024) ‘AGSI achieves “net zero” certification at Abu Dhabi steel plant’, Steeltimes International, 30 July. Available at: https://www.steeltimesint.com/news/agsi-achieves-net-zero-certification-at-abu-dhabi-steel-plant (Accessed 07 January 2026).
European Commission (2025) Commission strengthens the Carbon Border Adjustment Mechanism, Directorate‑General for Taxation and Customs Union, 17 December. Available at: https://taxation-customs.ec.europa.eu/news/commission-strengthens-carbon-border-adjustment-mechanism-2025-12-17_en (Accessed 07 January 2026).
European Parliament (2025) ‘CBAM: Parliament adopts simplifications to the EU carbon leakage instrument’, European Parliament Newsroom, 05 September. Available at: https://www.europarl.europa.eu/news/en/press-room/20250905IPR30181/cbam-parliament-adopts-simplifications-to-the-eu-carbon-leakage-instrument (Accessed 07 January 2026).
The Guardian (2026) ‘EU’s new “green tariff” rules on high‑carbon goods come into force’, The Guardian, 1 January. Available at: https://www.theguardian.com/environment/2026/jan/01/eus-new-green-tariff-rules-on-high-carbon-goods-come-into-force (Accessed 07 January 2026).
S&P Global (2025) ‘Brussels to expand CBAM to downstream steel and aluminium’, S&P Global Energy, 16 December. Available at: https://www.spglobal.com/energy/en/news-research/latest-news/energy-transition/121625-brussels-to-expand-cbam-to-downstream-steel-aluminum-overhaul-power-import-rules (Accessed 07 January 2026).