{"id":2706,"date":"2023-08-10T10:08:16","date_gmt":"2023-08-10T10:08:16","guid":{"rendered":"https:\/\/risksafe-esg.com\/cbam\/"},"modified":"2024-01-10T04:52:52","modified_gmt":"2024-01-10T04:52:52","slug":"cbam","status":"publish","type":"page","link":"https:\/\/risksafe-esg.com\/en\/cbam\/","title":{"rendered":"CBAM"},"content":{"rendered":"

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Carbon Border Adjustment Mechanism<\/h2>\n

CBAM – Carbon Border Adjustment Mechanism – is an instrument of EU climate policy whose aim is to prevent greenhouse gas emissions from being shifted from the European Union to other countries (“carbon leakage”) as part of the European Green Deal.<\/p>\n<\/div><\/div><\/div>

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\"\"Carbon Border Adjustment Mechanism<\/h2>\n

CBAM – Carbon Border Adjustment Mechanism – is an instrument of EU climate policy whose aim is to prevent greenhouse gas emissions from being shifted from the European Union to other countries (“carbon leakage”) as part of the European Green Deal.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

This means that CBAM is intended to protect European companies against competitors outside Europe, as most of them do not have any CO2 reduction obligations. CBAM thus helps to reduce the CO2 emissions of companies outside the EU. The Carbon Border Adjustment Mechanism is governed by Regulation EU 2023\/956 on the establishment of a carbon border adjustment mechanism (“CBAM Regulation”). But when does CBAM apply and what are the obligations for companies?<\/p>\n<\/div><\/div><\/div>

CBAM starts in 2023 with a transition period without financial obligations<\/h3>\n

From 2026, importers will have to purchase CBAM certificates from a national authority that correspond to the total emissions contained in the imported goods. The CBAM price is based on the average EU auction prices of the previous week. From 2026, the free allocation is to decrease by 10 % each year and be completely replaced by 2035. During this transitional phase, the number of CBAM certificates to be surrendered will be reduced by the free allocation for these goods. Countries that participate in or are linked to the EU ETS are excluded.<\/p>\n

During the planned transition phase, all companies within the EU will be required to prepare a report – the so-called CBAM report – on the emissions of the imported goods concerned from non-EU countries from October 2023. The first report is to be sent to the responsible authorities in January 2024 for Q4\/2023. This information must be updated one month after the end of each quarter.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

Mandatory information in the CBAM report<\/h3>\n<\/div>
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    Total quantity of each commodity type in MWh for electricity and in tons for other commodities, broken down by the facilities producing the commodities in the country of origin;<\/p>\n<\/div><\/li>

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    Actual total grey emissions in tons of CO2e per MWh of electricity or, for other commodities, in tons of CO2e emissions per ton of each commodity type, calculated according to the methodology described in Annex IV of the CBAM Regulation;<\/p>\n<\/div><\/li>

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    Total indirect emissions calculated in accordance with paragraph 7 of the CBAM Regulation;<\/p>\n<\/div><\/li>

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    CO2 price to be paid in a country of origin for the gray emissions associated with the imported goods, taking into account any available export refund or other form of compensation.<\/p>\n<\/div><\/li><\/ul><\/div><\/div>

    Declaration for the previous calendar year<\/h3>\n<\/div>

    In addition to this regular reporting, a declaration for the previous calendar year will also be required by May 31 from 2026. This includes:<\/p>\n<\/div>

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      Total quantity of imported goods in tons<\/div><\/li>
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      Total grey emissions in tons CO2e emissions per ton of each product type<\/div><\/li>
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      Total number of CBAM allowances corresponding to total gray emissions to be surrendered after reduction based on the CO2 price paid in a country of origin<\/div><\/li>
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      Test report from an accredited auditor confirming the CO2e emissions determined<\/div><\/li><\/ul><\/div><\/div><\/div><\/div>

      Which product groups are affected by CBAM?<\/h3>\n<\/div>
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        Cement<\/div><\/li>
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        Electricity<\/div><\/li>
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        Fertilizer<\/div><\/li>
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        Aluminum<\/div><\/li>
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        Hydrogen<\/div><\/li><\/ul><\/div><\/div>
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          Iron & steel, including pipes, collecting tanks and construction parts such as bridge elements, pillars, roofs, doors & windows.<\/p>\n<\/div><\/li><\/ul><\/div><\/div><\/div>

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          Before the end of the transitional period in 2026, the Commission will examine whether the scope should be extended to other goods, including organic chemicals and polymers. All goods covered by EU emissions trading are to be included by 2030. The Commission will also review the methodology for collecting indirect emissions and the possibility of including more downstream products.<\/p>\n<\/div><\/div><\/div>

          Which companies are affected by CBAM?<\/h3>\n<\/div>

          All companies that import the above-mentioned product groups from outside the EU are affected. These can be trading companies or manufacturing and\/or processing companies. Specifically, companies have a reporting obligation from January 2023 and an additional equalization obligation from 2026 – regardless of turnover and employee numbers.<\/p>\n

          Companies that do not process iron, steel or aluminum may also be affected if, for example, containers made of these materials that were previously imported from non-EU countries are used in production.<\/p>\n

          For importers of fertilizers, the most energy-intensive raw materials are affected; for importers of electricity, the focus is on a few companies that import energy from non-EU countries via pipelines or road and rail transport.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

          What measures do those affected need to take now?<\/h3>\n<\/div>
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            Checking whether and to what extent affected goods are imported from countries subject to reporting requirements.<\/div><\/li>
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            Clarification of reporting and notification requirements with the authorities (customs office)<\/div><\/li>
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            Preparation of the CBAM report for Q4\/2023<\/div><\/li>
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            Submission of the report to the authority in January 2024<\/div><\/li><\/ul>
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