EU Carbon Border Adjustment Mechanism: first report deadline approaches

The deadline for submitting the first report under the Carbon Border Adjustment Mechanism (CBAM) introduced by EU Regulation 2023/956 of the European Parliament, is at the end of this month on 31 January 2024.

The CBAM came into effect on 1 October 2023.

The CBAM is an EU policy designed to prevent carbon leakage from non-EU countries that have adopted less ambitious carbon reduction policies than the EU.

The CBAM aims to equalise the price of carbon attributable to domestic products with that of imports.

From 1 October 2023 to 31 December 2025, the CBAM will be in the so-called transitional phase. During this period, the system will have the following simplifications:

  • it will only apply to imports of certain goods (cement, iron and steel, aluminium, fertilisers, electricity and hydrogen) and not to all the CBAM goods listed in the annexes to the Establishment Regulation;
  • importers of these goods within the EU customs area will be required to report quarterly on the volume of their imports and the greenhouse gas emissions embedded in their production, but will not be required to pay any financial adjustment;
  • they will be able to use default values for the reporting of embodied emissions; 
  • they may use the monitoring, reporting and verification rules of the country of production;

The deadline for sending the first report is set for 31 January 2024 although, for the first period of application of the regulation, there will be a system for the data and reports that have already been submitted on time.

The transitional phase will serve as a learning period for all stakeholders (importers, manufacturers, and authorities). This will enable the European Commission to gather useful information on embedded emissions and to refine the methodology for the final phase, which will start on 1 January 2026. From that date, importers will have to purchase and return the number of 'CBAM certificates' corresponding to the greenhouse gases embedded in imported CBAM goods.

For any clarification or further information, please contact our experts in the environmental law practice, Simone Cadeddu ([email protected]) and Paola Bologna ([email protected]).

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