A new European regulation is likely to have an impact on importers. To anticipate it successfully, you first need to understand it.
The Carbon Border Adjustment Mechanism (CBAM) is part of the European Union's strategy to mitigate climate change. It is a customs duty imposed on imports of certain goods into the EU that are carbon-intensive during their production processes. CBAM ensures that the price of imports reflects their carbon content, thereby encouraging cleaner production worldwide.
BECI / Enterprise Europe Brussels would like to draw the attention of Brussels importers of the products concerned to this new regulation and recommends that they inform themselves fully about their responsibilities and the procedures for meeting the requirements put in place by the European Commission through this mechanism.
What businesses need to know about CBAM
CBAM imposes new responsibilities and requirements on companies importing specific goods into the EU. At present, the mechanism focuses on iron and steel, cement, aluminium, fertilisers and electricity. These sectors are essential to the global economy, but are also energy-intensive and have been identified as vulnerable to relocation when carbon pricing is only applied within the EU. Companies operating in these sectors will need to monitor the carbon content of their products, declare them and possibly purchase CBAM certificates to cover the carbon price at the EU border. This requires a good understanding of the supply chain and the carbon emissions associated with the production process. Companies will be required to declare the greenhouse gas emissions embodied in their imported products and to ensure that the CBAM regulations are complied with. As a result, importers will need to invest in systems and processes to track and report these emissions. This may require significant adjustments to current operational practices.
What calculation method and what should be declared under the CBAM?
As part of the border carbon adjustment mechanism, companies importing into the EU are required to declare the greenhouse gas emissions associated with their imports each year. To comply with the CBAM requirements, they must undertake several steps:
- First, they must assess and document the carbon emissions of their products. This task requires maintaining contact with suppliers to obtain the necessary data.
- Importers are therefore required to register with the national authority designated by the Member State of import, providing details of their imports and associated emissions. The method for calculating CBAM fees reflects the cost that EU producers incur under the EU Emission Trading Scheme (ETS). To determine the number of certificates required, importers must declare the total emissions incorporated into their goods. This calculation includes the carbon price already paid in the country of origin, to avoid double pricing. For each tonne of CO2 emissions associated with the imported goods, importers will have to purchase CBAM certificates to cover the emissions.
What are the progressive implementation phases?
The EU has built transition periods and adaptation mechanisms into the CBAM. The initial phase, from 2023, focuses on reporting requirements. During this period, importers of many carbon-intensive goods must report the emissions associated with their products, but they are not yet required to pay for the emissions. The aim of this phase is to establish a database and ensure that all parties understand their responsibilities and obligations.
From 2026, CBAM will enter its full implementation phase. Thereafter, importers will be required to purchase CBAM certificates reflecting the carbon content of their imports, aligning the cost of non-EU goods with those produced under the EU carbon pricing scheme.
More information here
Contact Enterprise Europe Brussels for further information on understanding and adapting to CBAM.
Source: DG Trade and Thematic Group Internationalisation Enterprise Europe Network