Green customs: Navigating CBAM

During the transitional period, CBAM covers imports of goods from the following six emissions-intensive industry sectors prone to carbon leakage:

• iron and steel
• cement
• aluminium
• fertilisers
• electricity
• hydrogen

The target industries and the list of covered commodities are expected to be extended after the end of the transitional period by 2030.

Excluded from CBAM are:

• shipments which do not exceed 150 Euros and military goods.
• countries covered by the EU Emission Trading System (ETS) such as Iceland, Liechtenstein, Norway and Switzerland.

CBAM will be implemented in two phases.

1. Transitional phase
The transitional phase from 1 Oct 2023 to 31 Dec 2025 serves as a pilot phase. This phase has no financial impact. Affected importers or so-called reporting declarants need to collect and report the direct and indirect CO2 emissions embedded in their imported goods brought into the EU. Subsequently, quarterly reports will need to be submitted no later than one month after the end of a quarter. The first report should cover imports from Oct to Dec 2023. The first report needs to be submitted no later than 31 January 2024 into the CBAM Transitional Registry.

As of 1 January 2025, EU member states will be responsible for granting the “authorised CBAM declarant” status. Importers and indirect customs representatives need to apply for the authorised CBAM declarant status to be recognised as CBAM declarants.

Only registered CBAM declarants will be able to file the required CBAM reports to the competent authorities.

After the transitional period the EU will make an assessment and most likely extend the scope of CBAM by adding all goods which fall under the EU Emissions Trading System.
 

2. Full implementation
On 1 January 2026 CBAM regulatory measures will be fully implemented. Authorised CBAM declarants need to yearly declare the quantity of imported goods from the previous year and their respective embedded emissions. Affected industries will be obliged to financially offset the carbon emissions embedded in their imported goods into the EU by purchasing carbon certificates at a price equal to the carbon price set by the EU Emissions Trading System (ETS). However, this will happen in a staged manner, reflecting the gradual phasing out of free allocation under the EU ETS. From 2034, 100% of emissions will have to be offset. 

Reporting of CO2 emissions will not be conducted at the time of import. Rather, the reporting will be conducted post-importation in a so called “CBAM declaration” pursuant to the following timelines:

1. Reporting during the transitional phase (pilot phase)

Importers need to submit a quarterly CBAM report to the CBAM Transitional Registry, that includes:

• The name of the CBAM declarant.
• The type and total volumes of relevant goods imported into the EU and their country of origin.
• The direct and indirect CO2 emissions, measured in tonnes.
• The CO2 price paid in the origin country, if applicable. With full implementation as of 1 January 2026 the importer can claim a respective reduction of CBAM certificates.

The first quarterly report is due on January 31st, 2024.

2. CBAM declaration as of 1 January 2026

Authorised CBAM declarants are obliged to submit a CBAM declaration by 31 May each year for the preceding year, with the following information:

• CO2 emissions embedded in their imported goods into the EU for the previous calendar year.
• Carbon price due in country of origin.
• The corresponding amount of CBAM certificates to cover those emissions.
• Confirmation by an accredited verifier for both direct and indirect emissions.

Missing, wrong or incomplete CBAM reporting leads to penalties between 10 to 50 EUR per tonne of unreported emissions, in selected cases even higher.

If you are an EU importer of goods which fall under the scope of CBAM, you should get prepared.

Understanding CBAM

• Familiarise yourself with the relevant provisions and potential implications towards your own business. The EU provides valuable information and training. Below you will find for your easy reference useful links on CBAM, its implications and requirements. 

Carbon emission calculation

• Define which of your imported goods are affected by CBAM.
• Analyse the best methodology for carbon calculation of embedded direct and indirect emissions while considering any potential carbon taxes or other levies that you already pay which may impact your CBAM liability.
• It is noteworthy that the CBAM provisions also affect the exporter/ producer shipping into the EU. Said shippers would need to support EU importers providing data on greenhouse gas emissions. It should be noted that CBAM reporting requires emissions data per product.

Customs obligations

• In order to access the CBAM Transitional Registry, EU importers submitting the CBAM reports during the transitional period must first register with the National Competent Authority (NCA) of the member state they are established. You can find the link to the Provisional list of CBAM NCAs in the section below. 
• EU businesses can defer filing the CBAM reports using an indirect customs representative acting as an authorised CBAM declarant. As of 1 January 2025 EU importers or indirect customs representatives need to apply for the authorised CBAM declarant status.