The EU's Carbon Border Adjustment Mechanism, what does it mean?

SkogThe EU climate package is moving forward in the EU. The EU has proposed new and expanded regulation on many aspects of climate action. For example, entirely new regulation relates to the EU Carbon Border Adjustment Mechanism (CBAM), which aims to prevent carbon leakage and encourage non-EU countries to meet ambitious climate targets. The CBAM Regulation was published in the Official Journal on 16 May 2023 and entered into force on 17 May 2023. Importing companies should prepare for the reporting obligations relating to the  CBAM transition period.

The application of CBAM will start gradually, but rapidly, from 2023 onwards

Transitional reporting data must be collected from 1.10.2023 onwards. Initially, the scope will cover the production of iron, steel, cement, aluminum, fertilizers, electricity and hydrogen and, under certain conditions, the associated indirect emissions. In addition, the CBAM applies to certain source materials and extends to some downstream products such as screws and bolts and similar iron or steel products.

From 2026, the obligations will be extended. Imports of CBAM goods will become subject to authorization, requiring i.e., the acquisition of the necessary number of CBAM certificates.

The obligation to report during the transitional period and to obtain CBAM certificates applies to all individuals and companies importing CBAM goods. The transitional reporting obligation is for the period 1.10.2023-31.12.2025.

Now is the time to check whether you are in the scope of the CBAM rules. If you import products covered by CBAM, you should make sure of the timeline for compliance and check whether the necessary information is available from either the seller or the manufacturer. CBAM compliance at national level is monitored by national Authorities and the Customs.

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