{"id":8957,"date":"2023-11-13T13:47:44","date_gmt":"2023-11-13T13:47:44","guid":{"rendered":"https:\/\/cms.scantrust.com\/?p=8957"},"modified":"2024-10-15T15:23:06","modified_gmt":"2024-10-15T14:23:06","slug":"digital-product-passport-regulation-what-does-it-change-for-companies","status":"publish","type":"post","link":"https:\/\/cms.scantrust.com\/digital-product-passport-regulation-what-does-it-change-for-companies\/","title":{"rendered":"Digital product passport regulation: What does it change for companies?"},"content":{"rendered":"

The designation \u201cpassport\u201d indicates a regulatory component, especially around the movement of goods. That is deliberate and explains the purpose of the digital product passport. Urgency for a digital product passport tool culminated along with schemes that have a broad goal of vastly improving the efficiency of production and supply chains. In the face of a global business environment that is frequently, inadvertently or not, incentivizing wastefulness, the digital product passport (DPP) aims to make a big dent in the business of\u00a0 inefficiency. This is why a DPP for every industry, and eventually every product, is part of the European Circular Economy Action Plan. Businesses that depend on selling physical items will need to endure a period of adjustment. The regulations themselves are being enforced in a phased schedule, sensitive to a transitional phase. Many businesses will want assistance with compliance. At the very least all businesses selling in the European market need to be familiar with what the new laws mean for their business, especially as new requirements come online.<\/p>\n<\/div>\n\n \n What is the European Circular Economy Action Plan?\n <\/h1>\n\n\n

The Circular Economy Action Plan\/CEAP<\/a> is part of the ambitious new European Green Deal. The European Green Deal is the E.U.\u2019s answer to the United States\u2019 Inflation Reduction Act, another massive plan for stewarding more environmentally sustainable activity. This world changing project has 3 broad goals:<\/p>\n

    \n
  1. No net emissions of greenhouse gasses by 2050<\/li>\n
  2. Economic growth decoupled from resource use<\/li>\n
  3. No person and no place left behind<\/li>\n<\/ol>\n

    Although these goals seem broad, and some have called them too ambitious, there is a substantial budget that\u2019s already been dedicated to the New Deal. Funding comes from about 600 billion Euros of investment from the NextGenerationEU recovery plan, a post-pandemic investment effort, and includes investment from the EU’s sizable 7 year budget.<\/p>\n<\/div>\n\n \n What is carbon leakage?\n <\/h2>\n\n\n

    The European Union has introduced all new frameworks to make sure that the Circular Economy Action Plan is successful. The transitional phase of the E.U.’s plan to reduce and eliminate carbon leakage, the Carbon Border Adjustment Mechanism (CBAM), began in October of 2023<\/b>. CBAM success will be measured by the price of carbon between domestic products and the price of imports being equalized. Equalization of carbon prices means that production and industry will be difficult to move outside of Europe toward other geographical and regulatory environments for the purpose of rent-seeking. Where this happens today, it is overwhelmingly to take advantage of carbon production and byproducts being cheaper outside of Europe. The term “carbon leakage” describes situations where this occurs. Managing and enforcing the reduction in carbon leakage will require tools, such as QR code labeling, that can associate unit level products with origin information.<\/p>\n

    For the transitional phase that began in October, 2023, the industries that rely on cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen are obligated to report volumes of their imports and associated greenhouse gas emissions. No costs are imposed on businesses at this first stage of the CBAM. For the relevant industries, the first reporting will be due for submission on January 31, 2024<\/b> and must include data from the 4th quarter of 2023. The expectation is that additional industries will be added to the reporting scheme based on how reporting for this first cohort of industries goes. The CBAM will likely be implemented very quickly though. The Green New Deal target for net greenhouse gas emissions by 2030 is a reduction to 55% compared to 1990 levels. Perhaps the most important concept being applied for achieving this reduction is the Digital Passport, a key part of the Circular Economy Action Plan (CEAP).<\/p>\n<\/div>\n\n \n Digital product passport regulation as part of the Circular Economy Action Plan\n <\/h1>\n\n\n

    The Circular Economy Action Plan has the following goals:<\/p>\n

    Make sustainable products the norm in the E.U.<\/p>\n