Carbon Border Adjustment Mechanism (CBAM) - EU Imports

September 13, 2023

Carbon Border Adjustment Mechanism (CBAM)

On October 1st 2023, the Carbon Border Adjustment Mechanism (CBAM), which was adopted by the European Commission on June 13th 2023, will enter into application in its transitional phase, with the first reporting period set for January 31st 2024. 

Who will be affected by CBAM?

Importers of goods into the European Union whose production creates a significant output of carbon leakage. Carbon leakage occurs when high carbon emitting production is transferred to a country that has less focus on controlling carbon emissions. Importers of commodities of cement, iron, steel, aluminium, fertilisers, electricity and hydrocarbon which have been sourced from 3rd countries will be affected.

How will this impact traders?

During the transitional phase from the 1st October 2023, through to December 31 2025, the declared importer, or the declarant who submitted the import customs declaration, would be obliged to submit a CBAM report on a quarterly basis. The report to include the following information for all goods that are in scope during the reporting period:

  • Total quantity of each type of goods;
  • The total embedded emissions;
  • Total indirect emissions;
  • The carbon price due in a country of origin for the embedded emissions in the imported goods, taking into account any rebate or other form of compensation available.

A CBAM report is submitted using the CBAM Transitional Registry which will be deployed for the use of Economic Operators in the EU as from the 1st of October 2023.

Where the customs broker has acted in the capacity of an Indirect Representative and the importer is not established within the EU, then it is the broker who will be obliged to make the CBAM filing, which would not be the case under Direct Representation or in the case of the importer being established in the Union.
Importers and declarants will not be required to be authorised from the start of the transitional period to import goods that are in scope of this legislation.

Once the transitional period is over on January 1st 2026 and the CBAM enters the definitive period, the importer or representative would be required to purchase CBAM certificates that are sold by Member Union States through a centralised platform, following registration to CBAM. The certificates will be priced according to the weekly average auction price of the EU ETS (Emissions Trading System) allowances, which is expressed in Euros per tonne of CO2 equivalents emitted.

Offsets are possible where the originating country has a similar approach to applying levies against emissions, this would be accounts for in the form of a rebate.

Which commodities are in scope and what is to be reported?

The following table outlines which commodities that will be affected and what is to be reported:

Related legislation:

Customs representation Article 18, (EU) 952/2013
Reporting requirements Article 32, (EU) 2023/956

For further details on commodities click here

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