The Carbon Border Adjustment Mechanism (CBAM for short) created by Regulation (EU) 2023/956 introduces a CO2 price for the import of certain goods from third countries into the EU. In future, so-called CBAM certificates must be purchased and redeemed for this purpose. In addition, importers of affected goods must submit reports on the greenhouse gas emissions generated during the production of the goods in the non-EU country.

Emission-intensive goods are affected - synchronisation of CBAM and EU ETS

In order to create a level playing field for the production of goods inside and outside the EU, the aim is to harmonise the CBAM with the European Emissions Trading System (EU ETS). CBAM therefore covers goods that are also subject to the EU ETS: Cement, fertilisers, iron & steel, aluminium, electricity and hydrogen.

• You can find detailed insights into the background of CBAM from our CBAM experts Dr Markus Böhme and Rebekka Ackermann here
  

Gradual introduction of CBAM - transitional phase for implementation has already begun

The transitional phase for implementing the Regulation began on 1 October 2023. From now on, a CBAM report must be submitted quarterly via the EU Commission’s transitional registry. The report must state the greenhouse gas emissions generated during production. The importer concerned must request the relevant information and parameters from the plant operators in non-EU countries.

• Use the Taylor Wessing CBAM Check to find out whether your company is affected by CBAM
  If you want to know whether the goods imported by your company fall under CBAM and whether you are obliged to submit the first CBAM report on 31 January 2024: take part in our free Taylor Wessing CBAM Check.

Companies must take action now - first report due on 31 January 2024

The complexity of the Regulation presents affected companies with major challenges, particularly in view of the short preparation time. The first CBAM report must be submitted by 31 January 2024. The necessary steps, in particular the request for the required information from the manufacturers of the goods, must therefore be initiated immediately. Failure to comply with the reporting obligations could result in fines of between €10 and €50 per tonne of unreported greenhouse gas emissions.

German Emissions Trading Authority announced as national competent authority and default values published by the EU Commission

The German Emissions Trading Authority (DEHSt), as the national competent authority, is responsible for implementing the Regulation. The DEHSt is also responsible for authorisation for the EU Commission’s CBAM transitional registry, through which the CBAM report must be submitted. However, no information on the authorisation process is yet known, which leads to considerable uncertainty given the short time remaining. However, it is encouraging that the EU Commission published the default values shortly before Christmas, which may be used to determine embedded emissions in the first three quarterly reports.

• Would you like to know what obligations you are subject to and how Taylor Wessing can support you in implementing the CBAM? You can find our brochure here