Are you ready for the CBAM? Some guidelines from EU Commission

From 1 October 2023  are you ready for the EU’s Carbon Border Adjustment Mechanism – CBAM? Please read our analisys of the EU Commissions’s:

1. Guidance document on CBAM implementation for importers of goods into the EU;
2. Guidance document on CBAM implementation for installation operators outside the EU.

The “Guidance document on CBAM implementation for importers of goods into the EU” establishes that the Carbon Border Adjustment Mechanism (CBAM) is an environmental policy instrument designed to support the EU climate ambitions of achieving a net reduction of greenhouse gas (GHG) emissions of at least 55% by 2030 and of reaching climate neutrality by 2050 at the latest.

As already explained by dogana sostenibile, the CBAM does not target countries but the embedded carbon emissions of products imported into the EU for specific sectors that are within the scope of the EU ETS and the most at risk of carbon leakage. These are: cement, iron and steel, aluminium, fertilizers, hydrogen and electricity.

The CBAM will be introduced in phases as follows:

• Transitional period (1 October 2023 to 31 December 2025): Designed as a “learning phase”, during which CBAM importers will report a set of data, including emissions embedded in their goods, without paying a financial adjustment for the embedded emissions. However, penalties may be imposed, for example for failing to submit the required quarterly CBAM reports.
• Definitive period (starting on 1 January 2026): o From 2026 to 2033, the embedded emissions for CBAM goods will be gradually covered by the CBAM obligation, as free allocation under the EU ETS is gradually phased out. o From 2034, 100% of embedded emissions of the CBAM goods will be covered by CBAM certificates and no free allocation will be given under the EU ETS for these goods.

The guidance confirms that the “reporting declarant” is the entity which is responsible for the reporting of embedded emissions of imported goods. In principle:

• the reporting declarant is the “Importer”. Indeed, it is possible to consider other categories of entities: a) importer who lodges a customs declaration; b) person, holding an authorisation to lodge a customs declaration referred to in Article 182(1) of the UCC (Union customs code); c) e indirect customs representative.
• The AEO status can help the reporting declarant.

The main obligation of the reporting declarant is the  ‘CBAM report’ to be provided on a quarterly basis, to the European Commission via the CBAM Transitional Registry.

Furthermore, the competent authority in the EU Member State where the reporting declarant is established plays an important role. It is in charge of enforcing the certain provisions of the CBAM Regulation, such as reviewing the CBAM reports to ensure that reporting declarants submit complete and correct quarterly CBAM reports, and to impose penalties in line with the Implementing Regulation, if necessary.