From 1 August 2024, businesses importing goods into the European Union (EU) will have to adapt their carbon emissions reporting to significant changes. These changes are part of (more…)

CBAM will be rolled out gradually. The first phase is a transitional period (1-10-2023 – 31-12-2025), which is considered a learning phase. During this period, importers must prepare a report calculating the emissions released during the production of the imported goods (hereinafter referred to as "embedded emissions").

These embedded emissions consist of:

1. Direct emissions released from the production process and from the production of heat used in the production process, regardless of the place of production of this heat.
2. Indirect emissions released during the production of electricity used in the production process, regardless of the place of production of this electricity.
3. In some cases, also direct and indirect emissions from the relevant input materials (precursors).

During this phase, these emissions will not yet be collected. However, the authorities can impose a fine if they do not fulfill the reporting obligation. The final phase will then start on 1 January 2026.

• From 2026 to 2033, embedded emissions for CBAM goods will be gradually taxed. The free allocation of quotas within the EU ETS will be phased out.
• From 2034, 100 % of inserted emissions from CBAM goods will be taxed. No free allowances will be allocated for these goods under the EU ETS.

The first phase of the implementation of this mechanism focuses on goods that pose the greatest risk of carbon leakage. These goods are hereinafter referred to as CBAM goods and include the following sectors:

• Cement
• Electricity
• Fertilizers
• Iron and steel
• aluminum
• Hydrogen

If you are importing goods classified in one of the commodity codes (CN codes) listed in this list with a value of more than EUR 150 per shipment, you should continue reading. If your goods do not fall within the scope of this list, you can still continue reading if this topic interests you. (Tim Hesselink, Ton Bendercher, Britt van Beveren, more at lexology.com)

The EU Carbon Border Adjustment Mechanism ("CBAM") was established by the CBAM Regulation (EU) 2023/956 ("CBAM Regulation"), which entered into force in May 2023. It is a carbon tariff system introduced as part of the EU's aim to reduce by 2030 greenhouse gas emissions by at least 55 %.

Although CBAM is not the first and only mechanism aimed at reducing emissions, it was specifically designed to respond to the carbon leakage that occurs when companies looking to cut costs move production to countries with less stringent climate policies. As a result, products from the EU are replaced by products from third countries, which are cheaper, but also more carbon intensive. (Srđana Petronijević, Nina Rašljanin, more at lexology.com)

laying down rules for the application of Regulation (EU) 2023/956 of the European Parliament and of the Council as regards reporting obligations for the purposes of the carbon border adjustment mechanism during the transitional period (Text with EEA relevance). Depending on the industry, they are in CBAM implementing regulation different categories of goods defined for reporting purposes. The number of goods categories and commodity codes covered by CBAM varies by sector:

1. Iron and steel: sintered ore, pig iron, ferroalloys (FeMn, FeCr, FeNi), crude steel and products of iron or steel - a total of 478 commodity codes
2. Aluminium: raw aluminum and aluminum products - a total of 56 commodity codes
3. Fertilizers: nitric acid, urea, ammonia and mixed fertilizers - a total of 25 commodity codes
4. Cement: Calcined clay, cement clinker, cement and aluminous cement - a total of 6 commodity codes
5. Electricity: 1 product code
6. Hydrogen: 1 commodity code

(More on eur-lex.europa.eu)

Almost every economist agrees that the most effective, efficient, cheapest, flexible and fair way to make a significant dent in CO2 emissions is to put a price on carbon (more…)

The Carbon Border Adjustment Mechanism (CBAM) begins with a transition phase from 1 October 2023 to 31 December 2025. The new "carbon tax" applies to certain categories of imported goods from non-EU countries that have high CO emissions during production _{2 .} The aim of its introduction is to prevent possible circumvention of EU legislation in the field of combating climate change by importing goods from third countries that do not apply EU measures to reduce greenhouse gas emissions. The mechanism is supposed to align the prices of imported goods with the actual carbon intensity associated with them. (Agnieszka Kisielewska)

CBAM includes:

• Cement (selected products from chapter 25 of the combined nomenclature of the European Commission or CN);
• Electricity (CN code 2716 00 00);
• Fertilizers (including codes belonging to headings 2808, 2814, 2834, 3102 and 3105, with the exception of CN heading 3105 60 00);
• Goods in the steel industry; for example, iron and steel and iron and steel pipes (selected products in chapters 72 and 73 of the CN); a
• Aluminum (selected products from chapter 76 of the CN).

The carbon border adjustment mechanism (or "CBAM" from the English Carbon Border Adjustment Mechanism, also referred to as "carbon duty") is part of the Fit for 55 legislative package and is intended to serve as an essential element of the toolkit to achieve the goal of a climate-neutral EU by 2050 at the latest in accordance with the Paris Agreement. It is an EU tool to support cleaner industrial production in the so-called third countries and the CBAM mechanism is expected to contribute to their decarbonisation.

The first phase of the introduction of the carbon tariff in the European Union

CBAM mechanism entered its first phase, which is a transition period from 1 October 2023, which will last until 31 December 2025. During this time period, importers and indirect customs agents have specific reporting obligations in relation to the CBAM mechanism. (Dagmar Yoderová, Katarína Mikovínyová, Lukáš Koporec, lexology.com)

On October 1, 2023, the European Union carbon border adjustment mechanism (hereinafter referred to as " CBAM”), starting with a transition phase that lasts until the end of 2025 ( transitional period ). CBAM was introduced by EU Regulation 2023/956 establishing a carbon border adjustment mechanism (hereinafter referred to as " regulation ") and further supplemented by Commission Implementing Regulation 2023/1773 of 17 August 2023. The purpose of the CBAM is twofold. The primary objective is to address greenhouse gas emissions contained in goods when they are imported into the EU customs territory in order to prevent carbon leakage, thereby reducing global carbon emissions and supporting the goals of the Paris Agreement. The secondary goal is to financially motivate operators based in countries outside the EU to reduce carbon emissions in their production processes. In addition, the CBAM will level the playing field between producers of goods based in non-EU countries who export goods to importers based in the EU, and European producers already subject to a carbon price under the EU Emissions Trading System (so-called “ EU ETS "). (Saman Bugeja).

The European Union launched the first phase of a world-first scheme on Sunday to impose CO2 emissions tariffs on imported steel, cement and other goods as it seeks to prevent more polluting foreign products from undermining its green transition. The planned tariff has sparked unease among trading partners, and at a forum last month China's top climate envoy Xie Zhenhua urged countries not to resort to unilateral measures such as the EU levy. The block will start to pick fees for CO2 emissions at the borders only in 2026. However, Sunday marks the start of the initial phase of the Carbon Border Adjustment Mechanism (CBAM), when EU importers will have to report greenhouse gas emissions from the production of imported volumes of iron and steel, aluminium, cement, electricity, fertilizers and hydrogen. Importers will have to buy certificates to cover these CO2 emissions from 2026, to bring foreign producers on par with EU industries, which must buy permits from the EU carbon market when they pollute. (They are the authors Philip Blenkinsop a (Kate Abnett)