Carbon Border Adjustment Mechanism (CBAM) Questions and Answers: Last updated on 24 October 2024

On 24 October 2024 the EU Commission updated the list of questions and answers about CBAM. In particular, the Commission added questions n. 41, 113, 126 and updated the answers 27, 39, 40, 52, 68, 75, 76, 89, 121.

ADDED QUESTIONS:

N.41:

I am an installation operator outside the EU. How can I best share data with EU reporting declarants?

Installation operators outside the EU may use the aforementioned communication template (Question 40) to share all required information for CBAM reporting with the reporting declarants.
Furthermore, a new portal section of the CBAM Registry will allow installation operators outside the EU to upload and share their installations and emissions data with reporting declarants in a streamlined manner, instead of submitting it to each declarant separately. The portal will allow operators to ensure the confidential treatment of business-sensitive data. Reporting declarants will then be able to automatically populate their CBAM reports with this emissions data in order to comply with their reporting obligation. Registration for installation operators will open from 1 January 2025.

113:

How can I become an “authorised CBAM declarant”?

From January 2025 onwards, CBAM declarants will be able to apply for the ‘authorised CBAM declarant’ status via the CBAM Registry. Their application will be processed by the National Competent Authority of the EU Member State where they are established. This status will become mandatory as of 1 January 2026 for the import of CBAM goods in the EU customs territory

How will the CBAM benchmarks be defined?

The CBAM benchmarks 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. Analytical work on defining the CBAM benchmarks has started. The CBAM benchmarks are not necessarily fixed numbers, as in some cases installation-specific data might be required.
While in some cases there could be a CBAM benchmark per CN code, it may also be possible that CBAM benchmarks are set per groups of CN codes (e.g. per aggregated goods category), if the respective production processes are similar. On the other hand, there could also be different CBAM benchmarks for the same CN code, for example in the case of goods made of primary versus secondary steel.
The overall objective is developing a methodology that mirrors the EU ETS free allocation rules, while limiting the burden for stakeholders.

UPDATED ANSWERS:

27, 39, 40, 52, 68, 75, 76, 89, 121.

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, they may contact their NCA to request delayed submission (following the steps indicated in the subsequent Question 28).
Note that the functionality for reporting declarants to request delayed submission directly in the CBAM Transitional Registry (“request delayed submission (technical error)”), is no longer available as of 1st October 2024.
For more detailed information on the request delay functionality, you may consult the “CBAM – Request Delayed Submission Process for declarants” document published on the CBAM website under the “Where to report” section

Which embedded emissions need to be reported by each CBAM sector?

The following table provides an overview of the specific emissions and greenhouse gases covered and how direct and indirect emissions are determined for each sector falling under the CBAM scope. Each sector’s particularities have been taken into account when designing the methods for reporting and calculating embedded emissions in these goods while mirroring the EU Emissions Trading System:

What information should reporting declarants request from producers in third countries to ensure they can submit the quarterly CBAM report?

The CBAM declarant must submit in the CBAM report the information contained in Annex I to the Implementing Regulation.
In order to ensure that they possesses all the required information, the reporting declarant should request from the producer the information contained in Annex IV of the aforementioned Implementing Regulation. The Commission services have compiled this information into an optional communication template (in Excel format) to facilitate the communication of information to between operators and importers. This template is available on the Commission webpage.

Will the data shared in the CBAM Transitional Registry be dealt with confidentiality?

According to Article 14 of the CBAM Regulation, the information contained in the CBAM registry “shall be confidential, with the exception of the names, addresses and contact information of the operators and the location of installations in third countries”. Article 13 of the CBAM Regulation and Article 15 of the Implementing Regulation laying down reporting obligations for the transitional period include an obligation of professional secrecy to information acquired by the competent national authority.
In the optional Communication template which operators and importers may use to exchange information during the transitional period, operators of installations have the possibility to decide whether they want to share the full, detailed information (optional) or only the synthesis tabs necessary to submit the CBAM declaration. There is a degree of flexibility allowing operators not to disclose the data they may consider sensitive. On the basis of this experience, the Commission will also reflect on the information that has to be disclosed in the reports and by the external verifiers in the definitive regime.
The Commission is working to provide, from January 2025, a separate access for operators to the Registry to allow submitting information directly through the Registry (see Question 41). Operators may then decide which information may be disclosed to which reporting declarants.

How are indirect emissions for the production of CBAM goods determined?

Indirect emissions are determined by multiplying the electricity consumed to produce a CBAM good with a relevant emission factor. The emission factor could be based on the electricity grid or represent an actual emission factor. The emission factor based on the country’s electricity grid is made available within the CBAM transitional registry

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.
For imports as from 1 July 2024, reporting declarants are required to report actual emissions for each CBAM good imported into the EU. If the declarant is not able to receive actual emission data from the supplier and chooses to report default values (outside the quantitative limit explained in Question 76), the CBAM report will be incorrect/incomplete.
Reporting declarants must undertake all possible efforts to obtain actual emission data from their supplier(s) or producer(s) of CBAM goods. Where declarants eventually fail to get data on actual emissions, they shall select, in the field “Type of determination”, the new option “Actual data not available”. This option exists for both direct and indirect embedded emissions. Note that if this option is chosen, the CBAM report will be considered incorrect/incomplete.
More importantly, if the option “Actual data not available” is chosen, reporting declarants are expected to also follow these steps:

(1) Use the “Additional Information” field to provide justifications on why the actual emissions data is missing.

(2) In the tab “Supplementary”, upload supporting documents attesting unsuccessful efforts and steps taken to obtain data from suppliers and/or producers.”

Note that where the option “Actual data not available” is chosen, subsequent fields in the Emissions tab will become non-editable (i.e. for direct embedded emissions: the field

“type of reporting methodology”; for indirect embedded emissions: the fields “Source of emission factor” and “Source of electricity”) and numeric fields will be automatically filled with “0”.

Declarants who have already submitted a CBAM report using a “workaround” to indicate that actual data is not available are not required to resubmit these reports.
NCAs are responsible for assessing whether reporting declarants have taken the necessary steps to comply with the obligation to submit complete and accurate CBAM reports. In that context, thoroughly justified difficulties in terms of getting the necessary data on actual emission values from the producer of the CBAM goods might be taken into account.
When deciding on penalties, NCAs may take into account the means and resources that reporting declarants have effectively allocated to unsuccessful efforts to collect the data, including assessing the adequacy of these means and resources to the economic size of the reporting declarant and the total amount of imports of CBAM goods and their embedded emissions. NCAs may also take into account the repetition of these actions and follow-ups with third-country producers or suppliers, the time period concerned and their duration.
The reporting declarants should always demonstrate that they undertook all efforts which can reasonably be expected from them to retrieve from the operator the necessary data on actual embedded emissions, also in view of their internal operational capacities and the operators’ ability to determine actual emissions.

What are the default values? How does this work?

For imports until 30 June 2024 (i.e. CBAM reports due until 31 July 2024), for each import of goods for which the reporting declarant does not have all the information, the reporting declarant could use other methods for determining the emissions, including default values made available and published by the Commission (see the TAXUD CBAM website). The use of default values for the purpose of reporting during the transitional period was thus possible for the first three reporting periods, without quantitative limits.
In addition, estimated values (including default values) can be used when determining direct emissions during the whole transitional period for input materials or subprocesses with a relatively minor contribution (i.e. <20%) to the total embedded emissions of complex goods (see Article 5 of the CBAM Implementing Regulation). For determining these 20%, indirect emissions are only relevant to calculate what the 100% total embedded emissions entails.
In other words, this means that for imports until 30 June 2024, 100% of the total embedded emissions could be determined using default values. For the remaining transitional period (i.e. for imports from 1 July 2024 to 31 December 2025), estimated values may be used when determining direct emissions but a quantitative limit is applied: for complex goods, up to 20% of the total embedded emissions, considering the entire production chain, may be then determined using estimations (using default values provided by the Commission would qualify as ‘estimation’). When reporting declarants make use of this flexibility to use estimated values (including default values) within the 20% limit, they should follow these steps in the Transitional Registry:

(1) In the field “Type of determination” for Direct embedded emissions, select “Actual data”.

(2) In the field “Type of applicable reporting methodology”, select “Commission rules” (3) In the field “Additional Information”, provide details on the applicable reporting methodology and the use of estimated values within the 20% limit.

By the end of the transitional period in 2025, the Commission will assess the default values based on the data collected.
During the transitional period, there will be only global default values (for each CN code under the CBAM scope). During the definitive period then, default values by country or even by region will be made available.
During the definitive period, authorised CBAM declarants will be able to use default values, without quantitative limits, in cases where actual emissions data is not available. However, it will likely be more favourable for importers to provide the calculation of embedded emission

What is the difference between the emission factor for electricity and the CO2 emission factor?

The emission factor for electricity represents the weighted average emission factor of all electricity-generating sources (including nuclear and renewable sources) in a geographic area (e.g. third country, group of third countries or region within a third country). By contrast, the CO2 emission factor represents the weighted average emission factor of those electricity-generating sources that are based on the combustion of fossil fuels. This means that the CO2 emission factor is always larger than the emission factor for electricity

for the same geographic area,

During the transitional period, the use of a CO2 emission factor for electricity is the default method to determine the specific direct embedded emissions for electricity as a CBAM good. By contrast, the emission factor for electricity is used for the default method to determine the specific indirect emissions for CBAM goods other than electricity.

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How can EU importers ensure that they receive the information they need from their non-EU exporters to be able to use the new system correctly?

Non-EU producers should provide the information on embedded emissions for goods subject to CBAM to the EU-registered importers of their goods. In cases where this information is not available, EU importers will be able to use default values to determine the embedded emissions which must be reported in the CBAM declaration and the number of certificates they need to surrender. However, it will likely be more favourable for importers to provide the calculation of embedded emissions.