The impact of the CBAM

Abstract

This thesis aimed to investigate the potential of the EU’s carbon border adjustment mechanism (CBAM) to promote sustainable adjustments in the production process of semiconductor machines, considering uncertainties in carbon accounting. The research combines a review of existing literature, a case study analysis of a selected semiconductor company, and a policy analysis of the EU’s CBAM to provide insights into the ability of the CBAM to promote the use of sustainable materials in the semiconductor industry.
The literature review highlighted the significance of life cycle assessment (LCA) as a carbon accounting tool and its potential to assess the relevant embedded emissions for the CBAM. The review showed indeed that LCA could be useful to assess the first phases of the production of the raw materials. Additionally, the review showed that it is less useful as a decision-making tool due to the fact that decision-making regarding the CBAM requires the consideration of other parameters as well, not only the environmental ones. Additionally, the review revealed the novelty of the EU’s CBAM regarding the carbon accounting tools and the CBAM’s design. At the same time, it highlighted the relevance of this research project.
The statistical sensitivity analysis (SSA) conducted as an element of the case study showed that there exists a significant variation in the total embedded emissions of the semiconductor machine depending on the kind of steel and aluminium used. This highlighted the opportunity for improvements in the embedded emissions caused by the semiconductor machines. The SSA is also used to evaluate the cost-benefit analysis (CBA) of the implementation of green steel and aluminium in semiconductor machines. The CBA showed that a high reduction in embedded emissions is required to achieve a break-even level with the costs of sustainable steel and aluminium. However, this reduction also depends on the design and implementation of the CBAM. The stakeholder analysis highlighted the actors, transactions, frictions, and games caused by the implementation of the CBAM. A concluding policy analysis was conducted to present possible implementations of the CBAM. The analysis showed that under the current circumstances for the CBAM to be successful in promoting sustainable changes in the semiconductor machine, while considering the uncertainty in the carbon reporting process, an unrealistically
high carbon price is needed to break even. The analysis, however, indicated a bright spot; if global electricity production becomes less carbonintensive, the CBAM may work very well in promoting sustainable materials. Thus, this thesis concludes that for this case study the EU’s CBAM is not effective in promoting sustainable adjustments in semiconductor machines. However, this conclusion is obtained for this specific case with its specific extreme policy scenarios. Therefore, further research could be conducted in assessing other policy scenarios or carbon accounting tools and test how they evaluate the CBAM on its potential to promote the use of sustainable materials in other industries as well.