The Carbon Border Adjustment Mechanism (CBAM), also known as carbon tariff or carbon border adjustment tax, refers to the requirement to pay or refund the corresponding taxes or carbon allowances for imported or exported high-carbon products on the basis of the implementation of strict domestic climate policies.
The adoption of the CBAM will encourage non-EU countries to reduce their emissions and prevent the risk of carbon leakage to reduce global greenhouse gas emissions, making a significant contribution to the implementation of EU and global climate goals.
CBAM stands for the European Union's Carbon Border Adjustment Mechanism, also known as the Carbon Border Tax or Carbon Tariff, which is a tax levied by the European Union on the carbon emissions of some imported goods. To put it simply, it is to adjust the difference between the same amount of carbon emissions inside and outside the EU through CBAM, so that the ** that needs to be paid for the same amount of carbon emissions inside and outside the EU is basically the same.
The transition phase of the CBAM carbon tariff was officially launched on October 1, and all relevant products exported to the EU are now required to report their greenhouse gas emissions during production, and the transition period will end at the end of 2025. From January 1, 2026, the CBAM will be fully implemented, covering six major industries, including steel, cement, aluminum, fertilizer, power generation and hydrogen.
The EU CBAM carbon tariff covers the application for industries in the transition period including content standards:
1.Importers are required to register for CBAM filings and become CBAM declarants. After registration, the filer opens an account for the submission of CBAM declarations and compliance.
2.CBAM filers are required to file an annual CBAM return each year. The report includes the total amount of goods exported to the EU in the previous year, the actual greenhouse gas emissions, the emissions certified by the certified service provider**, the carbon price paid by the company in the country of origin, and the calculated number of CBAM certificates to be paid.
3.Once the number of CBAM certificates to be paid is calculated, the declarant will need to purchase these certificates and complete the payment before the annual filing. Failure to have a sufficient number of CBAM certificates in your account by the deadline will result in penalties.
The EU carbon tariff has a profound impact on China's economy. It will help to shift our economy towards a more environmentally friendly and sustainable growth model. Companies will be forced to optimize production processes, improve efficiency, and reduce greenhouse gas emissions. This kind of transformation will not only help enhance the competitiveness of enterprises, but also help to upgrade and adjust the entire industrial structure, and bring higher quality development to China's economy.
Accelerate the construction of China's national carbon market: The implementation of CBAM will promote the further improvement of China's carbon market. At this stage, China's carbon market is still in its infancy, only involving the power generation industry, and the impact of the EU carbon tariff will force China to accelerate the expansion of carbon market coverage and include more industries. This will encourage enterprises to participate more actively in carbon emission trading, promote the maturity of China's carbon market mechanism, and contribute to the rapid realization of the 3060 dual carbon goal.
Promote enterprise technological innovation and the development of green technology: In the face of carbon tariff pressure, enterprises will be forced to accelerate the pace of technological innovation. In the process of transformation, it is necessary to rely on more green and low-carbon technologies and clean energy. This will bring new development opportunities for China's clean technology and renewable energy industries, and accelerate China's transformation from traditional industries to green and low-carbon industries.