17 October 2023

Carbon Border Adjustment Mechanism (CBAM)

As from October 1, 2023, Regulation 2023/956 introduced the EU’s Carbon Border Adjustment Mechanism (CBAM) with the objective to reduce carbon emissions, put a fair price on the carbon emitted during the production of carbon intensive goods imported into the EU and encourage a cleaner industrial production through a methodology for calculating embedded emissions according to the Paris Agreement and the EU Fit for 55 package.

This mechanism will be implemented in phases and is aligned with the phase-out of the allocation of free allowances set in the EU Emissions Trading System (ETS).

This transitional period intends to:

  1. serve as a pilot and learning phase for importers, producers, and authorities involved.
  2. collect information on the emissions to refine the methodology for calculating embedded emissions.
  3. bring the price of carbon produced in the EU into line with the price of carbon intensive goods imported into the EU.

Obligations for EU businesses during this transitional period

During the transitional period the obligations arising from the importation of goods subject to the CBAM are limited to:

  • Submit CBAM reports on a quarterly basis: Importers of goods (or their indirect customs representative) will have to report greenhouse gas emissions (GHG) embedded in their imports (direct and indirect emissions) during a given quarter of a calendar year, without making any financial payments or adjustments.
    The report shall be submitted no later than one month after the end of that quarter.
    The obligation to submit the CBAM report on a quarterly basis will cover the whole transitional period from 01/10/2023 to 31/12/2025.
  • Registration in the CBAM Transitional Registry: Developed by the EU Commission to assist traders in making and submitting the CBAM report, this registry will also allow communication between the Commission, the competent authorities, the national customs authorities and traders.
    Access and registration to the registry should be requested through the CBAM Portal (TAXUD).

The EU’s Carbon Border Adjustment Mechanism (CBAM) is expected to be fully in place as of 2026, but initially it will only apply to a certain number of products with a high risk of carbon leakage such as:

  • iron / steel
  • cement
  • fertilizers
  • aluminum
  • hydrogen
  • electricity

In line with Regulation (EU) 2023/956, Implementing Regulation (EU) 2023/1773 lays down rules for reporting obligations on the quantity of imported goods, direct and indirect emissions embedded in them, and any carbon price due for those emissions.

To help economic operators prepare for these new obligations the European Commission has prepared a number of written guidance documents.

Further information can be found in:

Share this page:

Quick links