As we know, since the 1 October 2023 is entered into force the Carbon Border Adjustment Mechanism – CBAM. By means of Guidance document on CBAM implementation for installation operators outside the EU, EU gives some suggestions to the operators of installations outside the European Union.
In particular, the Guidance document on CBAM implementation for installation operators outside the EU provides some practical guidelines to the operation of installations outside the European Union.
Question n.1 : Are you an operator of an installation producing “CBAM goods”? To answer, the operator has to check: a) the goods produced and exported to EU ( cement, iron and steel, aluminium and some chemical industries (fertilizers and hydrogen), and electricity); b) the HS codes of these goods;
Question n.2 : Are you exporting your goods to customers in EU Member States? To answer: the operator should note that his products may also be purchased by clients who themselves manufacture CBAM goods, and his products may serve as “precursor” for their CBAM goods, which then may be exported to EU countries. Also, if he sells his products to traders who then sell them to EU customers, his goods fall under the CBAM.
Question n.3: What are embedded emissions? The concept has been developed to reflect as much as possible the way in which emissions are covered by the EU ETS if the CBAM goods were produced in the EU. The EU ETS requires operators to pay a price for their own (“direct”) emissions.
Question n.4: What do you need to monitor?
- Step 1: Define the installation’s boundaries, production processes and production routes.
- Step 2: Define the reporting period you are going to use. The default case is the (European) calendar year.
- Step 3: Identify all the parameters you need to monitor: o Direct emissions of the installation: you have two options available: a) The “calculation-based” approach, where you need to determine the quantities of all fuels and relevant materials7 consumed, and corresponding “calculation factors” (in particular the so-called “emission factor” based on the carbon content of the fuel or material); b) The “measurement-based” approach, where you need to measure online the concentration of the greenhouse gases as well as the flow of the flue gas for each “emission source” (stack).
- Step 4: Determine the methodology to monitor each parameter the operator identified;
During the introductory phase until 31 July 2024 the operators of installations outside the EU may apply other methods allowed for emissions monitoring in your jurisdiction, if they lead to a similar emission coverage and accuracy.
From a customs compliance perspective (AEO), it could be useful to involve and share with the suppliers and partners outside the EU.