CBAM enters into force on 17 May 2023
On 16 May, the European Union’s (EU) new Regulation establishing a Carbon Border Adjustment Mechanism (CBAM) was published in the Official Journal of the European Union, and will enter into force the day after publication.
Currently, the CBAM Regulation applies to specified imports of goods (identified by their CN code) into the European Union within the following six emissions-intensive sectors: electricity, iron and steel, cement, aluminium and fertilisers and hydrogen. Before the end of 2025, an evaluation will take place regarding, amongst other things, the scope of the CBAM Regulation with a possible extension of the list of covered goods.
During the transitional period from 1 October 2023 until 31 December 2025, the obligations of the importer shall be limited to reporting obligations. Each importer, having imported CBAM goods during a given quarter of a calendar year must, for that quarter, submit a CBAM report containing information on the imported quantity of CBAM goods, the direct and indirect CO2 emissions contained therein (initially indirect emissions only for cement, electric power and fertiliser), as well as carbon pricing already paid in the country of production. The first quarterly report is due by 31 January 2024.
CBAM financial obligations take effect from 1 January 2026, whereby importers will have upfront to register as authorised declarants and start purchasing sufficient emission allowances (CBAM certificates) for imported CO2 emissions. From 1 January 2026, only registered declarants will be allowed to import CBAM goods and an annual declaration obligation applies (i.e. an annual CBAM declaration, in which specific data must be included, including verified embedded emissions). The first annual declaration, covering the 2026 calendar year, is due by 31 May 2027. To ensure uniform conditions for the implementation of this regulation, various implementing and delegated acts will be put in place in the forthcoming months.
For more information on this new regulation or for assistance with impact assessments and compliance guidance, please contact one of our CBAM experts.