CBAM update questions & answers 19 July 2024
EU Commission on 19 July 2024 published the update version of the FAQ on CBAM. We list below the new questions and answers.
- Answers updated 16, 18, 19, 26, 27, 35, 38, 48, 56, 60, 74, 87, 96, 99, 104, 106, 110, 114, 121, 123;
- Questions added 24, 30, 34, 65, 72, 103, 109, 116, 125.
For the readers’convenience there is below the list of the HS code of goods which fall under CBAM regulation.
- Cement (25070080 – Kaolin and other kaolinic clays, calcined; 25231000 – Cement clinkers; 252321 00 – White Portland cement, whether or not artificially coloured; 25232900 – Other Portland cement; 25233000 – Aluminous cement; 25239000 – Other hydraulic cements); greenhouse GAS related: carbon dioxide;
- Electricity (27160000 – Electrical energy); greenhouse GAS related: carbon dioxide;
- Fertilisers (28080000 – Nitric acid; sulphonitric acids; 2814 – Ammonia, anhydrous or in aqueous solution; 28342100 – Nitrates of potassium; 3102 – Mineral or chemical fertilisers, nitrogenous; 3105 – Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium); greenhouse GAS related: carbon dioxide; nitrous oxide;
- Iron and Steel (72 – Iron and steel [with exceptions]; 7301– Sheet piling of iron or steel; 7302 – Railway or tramway track construction material of iron or steel, the following; 730300 – Tubes, pipes and hollow profiles, of cast iron; 7304 – Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel; 7305 – Other tubes and pipes; 7306 – Other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similarly closed), of iron or steel; 7307 – Tube or pipe fittings; 7308 – Structures of iron and steel; 7309 – Reservoirs, tanks, vats and similar containers for any material of iron and steel; 7310 – Tanks, casks, drums, cans, boxes and similar containers of iron and steel; 7311 – Containers for compressed or liquefied gas, of iron or steel; 7318 – Screws and other items; 7326 – Other articles of iron or steel); greenhouse GAS related: carbon dioxide;
- Aluminium; (7601 – Unwrought aluminium; 7603 – Aluminium powders and flakes; 7604 – Aluminium bars, rods and profiles; 7605 – Aluminium wire; 7606 – Aluminium plates, sheets and strip; 7607 – Aluminium foil; 7608 – Aluminium tubes and pipes; 76090000 – Aluminium tube or pipe fittings; 7610 – Aluminium structures; 76110000 – Aluminium reservoirs; 7612 – Aluminium casks; 76130000 – Aluminium containers for compressed or liquefied gas; 7614 – Stranded wire; 7616 – Other articles of aluminium); greenhouse GAS related: Carbon dioxide and perfluorocarbons
- Chemicals (hydrogen): HS code: 2804 10 000; gas: carbon dioxide.
- What happens during the transitional period?
- During the transitional period, which started on 1 October 2023 and finishes at the end of 2025, the reporting declarant (which could be the importer or the indirect customs representative) must report at the end of each quarter emissions embedded in CBAM goods imported quarterly, without paying a financial adjustment, giving time for the final system to be put in place.
- Reporting declarants should get in touch with the national competent authority (NCA) in the country where they are established to gain access to the CBAM Transitional Registry, which will be used to submit CBAM quarterly reports.
- Where can I find detailed information on how to carry out the reporting of embedded emissions?
- All the required information to carry out the reporting is set out in the Implementing Regulation (EU) 2023/1773 setting out reporting rules for the transitional period. Commission services published (and will periodically update) two guidance documents (one for importers of CBAM goods and one for third-country producers) as well as one optional communication template to facilitate the exchange of information between producers and importers. You may find these documents on the CBAM webpage: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
- The guidance document for EU importers was translated in the 24 official EU languages. The Guidance document for non-EU producers is now available in English, French, German, Polish, Spanish, Italian, Arabic, Hindi, Korean, Japanese, Mandarin, Portuguese, Turkish, and Ukrainian.
The CBAM website also contains webinars, e-learnings, and other materials.
- Is it mandatory to use the communication template Excel file?
- No, the use of the communication template is not compulsory but recommended.
- The communication template is a tool that allows operators to determine the embedded emissions in CBAM goods according to the methodology specified in Implementing Regulation (EU) 2023/1773. The template ensures that all relevant source streams and emission sources, electricity consumption as well as relevant precursors are taken into account for the calculation.
- The template contains a worksheet ‘Summary_Communication’ which contains all information needed by the reporting declarant. This worksheet thus facilitates communication between third-country producers and importers (or their representatives).
- Pre-filled versions are available on CBAM’s website to help users fill in the communication template. Additionally, a training video detailing all necessary steps will soon be released
- What is an EORI number and what is the role of EORI numbers for the CBAM reporting?
- According to Article 1(18) of the Union Customs Code Delegated Act (UCC-DA) 2015/2446, ‘Economic Operators Registration and Identification number’ (EORI number) means an identification number, unique in the customs territory of the EU, assigned by a customs authority to an economic operator or to another person in order to register the economic operator or another person for customs purposes. The EORI number is unique in the customs territory of the EU, because it may be used for the customs-related activities of the person concerned in any EU Member State. For example, a Dutch company with a Dutch EORI number may lodge a declaration for release for free circulation in Spain. If the Dutch company wishes to use a customs representative, that customs representative may be established in Spain, but not necessarily; in the latter case, the provisions of Article 18(3) UCC have to be respected. In any case, irrespective of the national legislations on customs representation, persons who comply with the criteria laid down in points (a) to (d) of Article 39 UCC (i.e. the criteria fulfilled by an Authorised Economic Operator for customs simplifications – AEOC) are entitled to provide such services in a Member State other than the one where they are established.
- CBAM reporting declarants must submit their CBAM report using the same EORI number, which was provided to the customs authorities when submitting the customs declaration. There can only be one EORI number per economic operator. The competent NCA will be the NCA of the EU Member State in which the reporting declarant has received its EORI number.
- What are the reporting obligations? By when do I need to submit a report?
During the transitional period of the CBAM, from 1 October 2023 until 31 December 2025, the importer shall submit a CBAM report on a quarterly basis. This report shall include the information on the goods imported during the previous quarter and should not be submitted later than one month after the end of that quarter.
The report shall include the information referred to in Article 35 of the Regulation:
- the total quantity of each type of CBAM good;
- the actual total embedded emissions;
- the total indirect emissions;
- the carbon price due in a country of origin for the embedded emissions in the imported goods (including its relevant precursors where applicable), taking into account any rebate or other form of compensation available.
- I was unable to submit the first CBAM report within the submission deadline due to technical errors. What should I do?
- If a reporting declarant is unable to submit a CBAM report within the submission deadline due to technical errors, delayed submission may be requested via the CBAM Transitional Registry.
- For CBAM reports for the first two reporting periods(i.e. reports due 31 January 2024 and 30 April 2024) the “request delayed submission (technical error)” option is available in the CBAM Transitional Period until the 31 July 2024. For CBAM reports for the third reporting period (i.e. reports due 31 July 2024), this option will be available until 30 August 2024. After the request is made, reporting declarants have 30 days to submit their CBAM report.
- In any case, in line with the Implementing Regulation 2023/1773, reporting declarants may subsequently modify and correct their first two CBAM reports until 31 July 2024.
- In accordance with NCAs, no penalties will be imposed on reporting declarants who have experienced technical difficulties when submitting a CBAM report.
- For more detailed information on the request delay button, you may consult the “CBAM – Request Delayed Submission Process for declarants” document published on the Commission CBAM website under the “Guidance” section.
- What is considered a ‘consignment’?
- A single ‘consignment’ means products that are either: o (a) sent simultaneously from one exporter to one consignee; or o (b) covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such document, by a single invoice.
- Goods dispatched by the same consignor to the same consignee that were ordered and shipped separately, even if arriving on the same day but as separate parcels to the postal operator or the express carrier at the destination, should be considered as separate consignments. In the same vein, goods covered by the one order placed by the same person, but dispatched separately, should be considered as separate consignments. Such definition, however, should apply without prejudice to the provisions governing customs controls (Article 46 UCC). Customs authorities may carry out any control they deem necessary to ensure compliance with the customs rules.
- It should be remembered, however, that according to Art. 27 of the CBAM Regulation, the Commission shall take action to address practices of circumvention, which includes the artificial splitting of shipments into consignments the value of which does not exceed the de minimis threshold of 150€ (see Art. 27(2b) CBAM Regulation).
- What should I do if the operator who produced the goods is no longer in existence at the time of import? • The Implementing Regulation does not contain a derogation for goods produced by operators that have ceased to exist. Therefore, in principle, the same reporting obligations apply as for any other import of CBAM goods.
- However, if a reporting declarant is unable to comply with the reporting obligations because the operator no longer exists, the declarant could use emissions data for similar or identical goods, and clearly state this as additional information. For the definition of similar or identical goods, you can refer to Art. 1(14) and Art. 1(4) of Implementing Regulation (EU) 2015/2447.
- Further, for the field on the operator’s name and operator ID, it should also be stated that the operator is no longer in existence. The Commission and the NCA may check the veracity of these statements during the review process and may launch a correction procedure, where considered necessary. 21 Reporting: responsibilities and procedures
- What is the role of the European Commission during the transitional period?
The Commission will have the following tasks during the transitional period: • Manage the CBAM Transitional Registry.
- Review CBAM reports communicated by reporting declarants, and communicate to the NCAs a list of reports for which it has reasons to believe they are not compliant with the CBAM rules.
- Monitor the implementation of CBAM, progress, and risks of circumvention, as well as analyse the impact of CBAM on exports, downstream products, trade flows and least developed countries (LDCs).
- Prepare secondary legislation in the form of implementing acts: o In mid-2023 on the transitional period (art. 35), reporting obligations and reporting infrastructure. o In mid-2024 on the authorisation of declarants (art. 5 and 17), and the CBAM registry (art. 14). o In mid-2025 implementing acts on indirect emissions (annex IV), verification (art. 8), accreditation of verifiers (art. 18) carbon price paid (art. 9), information for customs (art. 25), continental shell (art. 2), average ETS price (art. 21), CBAM declaration (art. 6), methodology (art. 7) and free allocations (art. 31).
- Prepare secondary legislation in the form of delegated acts during mid-2025 for the accreditation of verifiers (art. 18) and the selling and repurchasing of certificates (art. 20). If necessary, the Commission will also prepare delegated acts on exempted countries, rules on electricity and anti-circumvention.
- Set up the Common Central Platform where the sale, repurchase of certificates will take place in the definitive period
- Are there verification obligations during the transitional period?
- No, verification by an external independent body will only be mandatory from 2026 for reporting based on actual values. Secondary legislation for the definitive period will follow in the coming years which will define the rules for verification of emissions based on the data collected during the transitional period from EU importers
What is the CBAM Transitional Registry?
- In order to ensure an efficient implementation of reporting obligations, the Commission has developed an electronic database, which will collect the information reported during the transitional period. The CBAM Transitional Registry is a standardised and secured electronic database containing common data elements for reporting in the transitional period, and to provide for access, case handling and confidentiality. The CBAM Transitional Registry is the basis for the development and establishment of the CBAM Registry pursuant to Article 14 of Regulation (EU) 2023/956.
- Reporting declarants may connect to the CBAM Transitional Registry through this link: https://cbam.ec.europa.eu/declarant
- Who can fill in the CBAM report in the CBAM Transitional Registry for the reporting declarant?
- Multiple Transitional Registry user accounts can be linked to the same EORI number as long as these accounts are from employees of the responsible reporting declarant (i.e. the importer or indirect customs representative). However, only one user will be able to edit a particular CBAM quarterly report in the CBAM Transitional Registry at a given time.
- The reporting declarant can delegate access to the Transitional Registry to a “CBAM Service Provider”, who can fill in the CBAM report in the name and on behalf of the reporting declarant. The delegation in such cases follows the delegation model “Employer – Employee”, where “Employer” is either the importer or an indirect customs representative and “Employee” is the “CBAM Service Provider”. Note that in this case both the importer-employer (EO) and the provider-employee (EMPL) users will need to be configured by the Member States in UUM&DS and the importer will be responsible to delegate (via UUM&DS) the CBAM Declarant access to the “CBAM Service Provider”. This means that when the “CBAM Service Provider” connects to the CBAM Registry as employee, the service provider is using the EORI of the importer that has delegated the access.
- What is the relevant time period for calculating embedded emissions? Can data from previous years be used?
- The default reporting period, i.e. the reference period for operators for determining embedded emissions, is a calendar year. However, it may be justified to use other periods (such as a fiscal year) provided that they ensure similar coverage and cover at least 3 months. More details can be found in the Guidance documents under Section 4.3.4 (for EU-importers)/ Section 4.3.3 (for non-EU installations).
- If operators monitor their emissions on the basis of a calendar year, then they need to start monitoring emissions according to the CBAM methodology already in 2024 so that all required data are available for goods produced in 2024 and imported in 2025.
- For the CBAM report due in the first quarter of the year, the data of the previous year should be used. In cases where such data are not yet available until the end of January/February, data of the year before could be used. • Concerning stock items, see the question “How to deal with stock items for which there is no emission data available?”.
- Can the absorption rule be applied for the calculation of embedded emissions of composite goods?
- No. The absorption rule is a rule used to determine the origin of a good. The absorption rule allows keeping the originating status of intermediate products, which are used for subsequent manufacturing operations of originating goods and to disregard the part of all former non-originating inputs contained in intermediate products, provided that certain conditions are fulfilled. The calculation of embedded emissions in CBAM goods follows completely different rules.
- Is enhanced oil recovery (EOR) eligible for deduction in the calculation of embedded emissions?
- Enhanced oil recovery (EOR) is primarily a technology utilized to increase the extraction of oil. The CO2 injected in the process could theoretically be considered for deduction in the calculation of embedded emissions if the oil extraction site provides for a long-term geological storage site and provided that certain criteria are met. The conditions, identical to those for carbon capture and storage (CCS), are spelled out in Annex III, Section B.8.2 33 to the Implementing Regulation (Section 6.5.6.2 of the guidance provides more explanations).
- My supplier is not sending me the necessary information before the report is due. What should I do?
- A good cooperation between third-country producers and reporting declarants is crucial. The Commission has published guidance and templates to help producers determine the embedded emissions of the CBAM goods they produce in non-EU countries.
- Ultimately, the reporting declarants bear the responsibility for ensuring the completeness and correctness of the CBAM reports. Reporting declarants are liable and may be subject to penalties where they fail to comply with the CBAM reporting obligation and where they have not taken the necessary steps to comply with the obligation to submit a complete and accurate CBAM report following the correction procedure.
- A more detailed communication on this matter will soon be published on the CBAM Commission website
- Who is the CBAM reporting declarant for electricity imports?
- In general, the CBAM reporting declarant is the person who submits the customs declaration. As is the case for other CBAM goods, importers established outside of the EU must appoint an indirect representative to fulfil the CBAM reporting obligations. There is also the possibility to appoint service providers for CBAM reporting purposes, but this does not lift importers (or indirect representatives, where applicable) from liability. • During the definitive period, under Article 5(4) of the CBAM Regulation, where transmission capacity for the import of electricity is allocated through explicit capacity allocation, the person to whom capacity has been allocated for import and who nominates that capacity for import shall be regarded as an authorised CBAM declarant in the Member State where the person has declared the importation of electricity in the customs declaration.
- Can we divide a steel site into more than one installation?
- The division of sites into different installations is possible. The division of installations into separate production processes is even obligatory where different production routes exist within one installation.
- Moreover, dividing installations is in particular useful for more detailed, more transparent monitoring. For example, it may be useful to consider the coke ovens and a lime production as separate installations, as they would not count to the embedded emissions of the steel produced.
- According to the monitoring rules of Implementing Regulation (EU) 2023/1773, a division of installations should not lead to different results of the final embedded emissions of steel products, as precursors are taken fully into account by the CBAM methodology.
- Can an importer use different customs representatives for the customs declaration and the CBAM reporting?
- As regards to the reporting requirements applicable during the transitional period, the CBAM Regulation (Article 5) foresees the possibility for importers of CBAM goods to appoint direct or indirect customs representatives within the meaning of Article 18 of the Union Customs Code (see to that effect Regulation No 952/2013): o In the case of direct representation, the EU-established importer would be subject to the CBAM obligations, while the direct customs representative keeps the status of customs declarant. o If an EU-established importer appoints an indirect customs representative, and the latter agrees, the reporting obligations shall apply to such indirect customs representative. o Where the importer is not established in an EU Member State, the reporting obligations shall apply to the indirect customs representative in any case. 41
- There is no possibility during the transitional period for an importer to have several indirect customs representatives for CBAM goods covered by the same customs declaration.
- For an importer established in an EU Member State, it would be possible to use a direct customs representative to carry out customs obligations, and to hire a service provider to enter CBAM reporting data in the CBAM Transitional Registry. For this purpose, the importer would delegate access to the Transitional Registry to this service provider, who would fill in the CBAM report in the name and on behalf of the importer. The delegation in such cases follows the delegation model “Employer – Employee”, where “Employer” is either the importer or an indirect customs representative and “Employee” is the service provider. Note that in this case both the importer-employer (EO) and the provider[1]employee (EMPL) users will need to be configured by the Member States in UUM&DS and the importer will be responsible to delegate (via UUM&DS) the CBAM Declarant access to the Service Provider. This means that when the “CBAM Service Provider” connects to the CBAM Registry as employee, the EORI of the importer that has delegated the access is being used. When the “CBAM service provider” thus gains access to the Registry using the EORI number of the importer, and when the CBAM report for that importer is submitted, the importer would in any case remain the reporting declarant and therefore be legally liable for CBAM obligations.
- For an importer established outside the EU, the indirect customs representative will be responsible for both the customs declaration and the CBAM declaration.
- Which is the relevant NCA in case an importer is a branch of a company registered abroad, and both share the same EORI number?
- If the parent company is a legal person with headquarters in a non-EU country and has several entities in different EU Member States, none of which are ‘persons’ as defined by Article 3(18) of Regulation (EU) 2023/956, that parent company will need an EORI number. Since economic operators and other persons may have only one EORI number, although the parent company has entities in several Member States, they may apply for and use only one EORI number assigned by one of these Member States.
- If the parent company has an entity (e.g. registered office) in another EU Member State that meets the definition of a ‘person’ under Article 3(18) of Regulation (EU) 2023/956, that entity would also have an EORI number and the respective Member State would be considered the Member State of establishment for that respective entity. In such cases, both the parent company and that entity will each be assigned an EORI number. The parent company will be assigned an EORI number by the authorities of the EU Member 44 State where it is established. In this case, in principle, there are different NCAs responsible for the parent company and the subsidiary.
- Must goods transiting in the EU be reported under CBAM?
- No. If goods are declared for temporary admission, for example under Article 95 of Council regulation (EC) No 1186/2009, they do not fall under the scope of the CBAM. Only goods released for free circulation into the EU are subject to the CBAM.
- Similarly, the CBAM does not apply in respect to samples of non-EU origin (e.g. sent for testing), which are declared for temporary admission and not released for free circulation.
- Do I need to report on CBAM goods that are placed under the inward processing regime?
- CBAM becomes due only for goods that are released for free circulation in the EU. Thus, in the case of CBAM goods that are placed under a custom suspensive regime in view of their future export or in view of their processing, there is no CBAM obligation.
- Note, however, that if a CBAM good leaves the inward processing regime to be placed on the EU market, then there is a CBAM obligation. In this case, the bill of discharge should be uploaded as a supporting document when submitting the CBAM report.
- A CBAM reporting obligation also arises in the specific case where a CBAM good that was placed under inward processing is processed into a product that itself is no longer a CBAM good, and this final good is finally released for free circulation in the EU (see Article 6 of 45 the Implementing Regulation). In this specific case, the CBAM report would contain information on the quantities and embedded emissions of CBAM goods placed under inward processing (Article 6(f) and (g) of the CBAM Regulation), but not on the quantities and embedded emissions of the final goods released for free circulation, because in the example, these goods are not CBAM goods themselves (i.e. Article 6(a) and (b) do not apply).
- How will the CBAM work in practice during the definitive period?
- The CBAM will mirror the ETS in the sense that the system is based on the purchase of certificates by importers. The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in € per tonne of CO2 equivalents emitted, and it will be made publicly available weekly by the Commission. Importers of goods will have to, either individually or through a representative, register to take part in the CBAM and buy CBAM certificates.
- The certificates surrendered by the CBAM declarant shall correspond to the amount of embedded emissions of the relevant goods expressed in tonnes of CO2. In addition, there is a possibility to purchase certificates along the year.
- CBAM certificates will be sold by Member States through a common central platform to authorised CBAM declarants established in that Member State. Only authorised CBAM declarants are allowed to purchase certificates. These certificates shall be surrendered via the CBAM registry by 31 May each year, 2027 the first time, for the embedded emissions of imports that occurred in year 2026.
- The reporting for embedded emissions is expected to take place under similar conditions than during the transitional period, i.e. exclusively through an online portal, the CBAM registry.
- How will I get access to the CBAM Registry in the definitive period?
- Once an importer’s application has been authorised by the competent authority, they will be considered an authorised CBAM declarant. Each CBAM declarant will be assigned a CBAM account number by the Commission, which will then allow access to the CBAM registry.
- The access management in the definitive period will also be performed via the EU-wide UUM&DS. This means that declarants will have the ability to access the CBAM Definitive system using either Option 1 (CBAM Domain) or Option 2 (Customs Domain), depending on the choice made by the national authorities.
- New UUMDS profiles will be required for the definitive registry. NCAs will need to assign these new profiles to existing declarants to ensure their access to the definitive system.
- In the definitive period, third-country operators will also be able to access the CBAM Registry. Third-country operators will use the Commission’s DG DIGIT’s EU-Access platform to access the CBAM portal. The Commission will validate access requests from third-country operators and grant access where appropriate. If access to the platform needs to be revoked, the Commission will consult Member States.
- Why are indirect emissions only included in the CBAM for cement and fertilisers?
- Indirect emissions are not included in the scope of CBAM for those goods, where EU Member States can grant indirect cost compensation. This compensation applies to indirect emissions costs incurred from greenhouse gas emission costs passed on in electricity prices.
- However, the Commission will have to assess the possibility to extend the scope of CBAM to indirect emissions of other goods by the end of the transitional phase.
- How will the accreditation of verifiers work?
- The European Commission will work during the transitional period on supplementary legislation that will establish the rules on accreditation and verification.
- Such legislation will encompass an implementing act, in accordance with Articles 8 and 18 of the CBAM Regulation, for the verification principles and the alignment of the verification scopes of the EU ETS and the CBAM, and secondly a delegated act in accordance with Article 18 of the CBAM Regulation which will specify the conditions for accreditation of verifiers. The indicative planning for these acts is by the end of 2024.
- How will free allocation be accounted for in the calculation of the CBAM obligation to be paid?
- Rules will be developed by the European Commission in that regard following the empowerment of Article 31 (2) of the CBAM Regulation.
- The CBAM obligation to be paid by importers will be reduced by the corresponding free allocation that an EU producer would receive for the production of the same goods. This will ensure that products produced in the EU and in third countries are treated equally
This adjustment for free allocation will include a definition of CBAM benchmarks, which in turn will be based on a combination of the EU ETS benchmarks. A combination is needed because there are only a limited number of ETS product benchmarks available and because these are not defined per CN codes.
- The gradual phase-out of ETS free allowances in CBAM sectors from 2026 to 2034 will be mirrored by a corresponding increase in the CBAM obligation. This is because the CBAM adjustment for free allocation will gradually decrease and thereby the CBAM obligation will increase.
- The emissions subject to CBAM will be calculated as follows: emissions subject to CBAM = embedded emissions – CBAM benchmark × CBAM factor
- For example, if the embedded emissions of a good amount to 1.2 t CO2 eq/t good and the corresponding CBAM benchmark is 1 t CO2 eq/t good, then the emissions subject to CBAM in 2026 (with a CBAM factor of 97.5%) would amount to: 1.2 – 1 × 0.975 = 0.225 t CO2 eq/t good, equivalent to around 19% of the embedded emissions. In 2030 (CBAM factor 51.5%), the emissions subject to CBAM would amount to 0.685 t CO2 eq/t good (i.e. around 57% of the embedded emissions) and in 2034 (CBAM factor 0%) to 1.2 t CO2 eq/t (i.e. 100% of the embedded emissions). From 2034 onwards, there will be no adjustment for free allocation and the full CBAM liability would apply for imports of this good.
- It follows from this calculation that no CBAM obligation will apply in a given year if the embedded emissions of a good are lower than the CBAM benchmark multiplied with the CBAM factor. In the given example for 2026, no CBAM obligation would thus be due if the embedded emissions were equal to or lower than 0.975 t CO2 eq/t.
- As there is generally no free allocation for electricity generation in the EU ETS, there will in principle no free allocation adjustments to the CBAM liability for electricity imports. Thus, the entire embedded emissions in the electricity production will require a corresponding purchase of CBAM certificates from 2026 onwards.
- Will CBAM generate revenues and, if so, how will they be used?
- CBAM is not designed to generate budgetary revenues. Generally, the potential evolution of revenues will depend on the future level of the ETS carbon price, the embedded emissions in the imported CBAM products, and the carbon price effectively paid in third countries. Future CBAM revenues would however only represent an ancillary effect of the policy as the introduction of CBAM is expected to lead to a reduction in embedded CO2 emissions and will incentivize trading partners to consider the revenue generation dimension of domestic carbon pricing policies.
- Should, however, revenues be generated particularly in the first years following the introduction, they are set to become an own resource for the EU’s budget following the EU’s interinstitutional agreement LI 433/28.