CBAM obligations in place from October 2023

The European Parliament and the EU Council have approved the draft regulation on the CBAM (Carbon Border Adjustment Mechanism), the issue that have popped out on our blog several times. Pursuant to this draft, the first obligations related to CBAM will apply from 1 October 2023.

CBAM aims to minimize the risk related to the import of goods from third countries that do not apply EU measures for cutting greenhouse gas emissions by imposing additional costs on importers. This cost will depend primarily on embedded emissions and will be settled through CBAM certificates.

List of goods

CBAM will initially cover in particular the import of:

• cement (selected products from CN 2523) and kaolin clay (CN 2507),
• electricity (CN 2716 00 00),
• fertilizers (i.e., from CN 2808, 2814, 2834, 3102, 3105, except for CN 3105 60 00),
• iron and steel (selected products from CN 72 and 73) and agglomerated iron ores and concentrates (CN 2601 12 00),
• aluminum (selected products from CN 76),
• hydrogen (CN 2804 10 000).

Timeline for the regulations

From 1 October 2023 – a transitional period – entrepreneurs will be required to prepare quarterly reports on imports of goods covered by the CBAM regime – this period will last until 31 December 2025.

From 31 December 2024 – the process of applying for the status of authorized CBAM declarants, registering operators and installations in third countries and setting up accounts in the CBAM registry will begin.

From 1 January 2026 – the sale of CBAM certificates will start, entities will be required to calculate embedded emissions (the first declaration must be submitted by 31 May 2027 for the year 2026), provisions on penalties and certificate surrendering will come into force.

CBAM implementation

CBAM is going to have a huge impact on supply chains, in particular in manufacturing industries, but also on the operation of customs agencies. The provisions will partially start to apply already this year, therefore it is advisable to launch preparation for the implementation of CBAM immediately, especially:

• verify the lists of imported goods both in terms of their classification and origin in order to recognize the obligations arising from CBAM, as well as in terms of data required to meet reporting obligations,
• implement internal procedures indicating the responsibilities of individual employees and how to implement CBAM provisions.