CBAM (Carbon Border Adjustment Mechanism) is a carbon border adjustment mechanism proposed by the European Union to deal with the problem of "carbon leakage" in climate policy. Carbon leakage refers to the fact that some regions or countries have too strict greenhouse gas emission control policies, causing companies to shift production to regions or countries with less stringent emission control policies, thereby increasing the overall global emissions.
The CBAM comes against the backdrop of the EU's early implementation of a series of climate policy measures, such as the European Union Emissions Trading System (EU ETS) and renewable energy policy. These policy measures have increased the production costs of EU companies to a certain extent, and at the same time, some companies have also moved production to areas with relatively loose emission control policies, which has led to the emergence of carbon leakage problems.
- Purpose
Through the implementation of the CBAM (carbon tariff) policy, non-EU enterprises will be allowed to bear the same carbon cost as EU local enterprises, so that the CBAM (EU carbon tariff) will eventually converge with the EU ETS (European Union Carbon Trading) policy.
-CBAM covers a wide range of industries
The EU Import and Export Border Adjustment Mechanism (CBAM) currently covers steel, cement, aluminium, fertilisers, electricity and hydrogen, and will be further assessed to include other commodities at risk of carbon leakage, including organic chemicals and plastics.
- CBAM requirements for each phase
Transition period: October 2023-2025
Taxed products imported into the EU are required to provide a carbon emissions report, but will not be actually taxed.
Deadline for submission of the first report: January 31, 2024 (submission of the fourth quarter of 2023 report).
Reporting frequency: Quarterly and annual carbon reports are required.
Data requirements: If the measured value of carbon emissions cannot be provided or the measured value is not recognized by the EU, the average value of the carbon emissions of the reciprocal x% of similar enterprises in the exporting country will be taken; If there is no data on the exporting country, the average of the penultimate x% of similar companies in the EU is taken (the exact figures are not specified, but 10% and 5% in the old version).
Certification requirements: Selection, no mandatory requirements during the transition period.
Taxation period: from 2026 onwards.
Actual carbon tariffs.
Mandatory certification requirements.
Carbon tariff = (average carbon emissions of the product - free allowances allocated to the relevant products in the EU) x quantity of the product x average weekly carbon price of the EU - the carbon cost paid by the product before export.
- CBAM fees
There is a quarterly fee or a one-year contract. Specifically, how many products need to be filled in, and what is the CN code?
- CBAM filing process