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EU Enforces Reporting Regulations for Importers under Carbon Border Adjustment Mechanism (CBAM)

ESGEU Enforces Reporting Regulations for Importers under Carbon Border Adjustment Mechanism (CBAM)

The European Commission has introduced reporting regulations for importers operating under the Carbon Border Adjustment Mechanism (CBAM), the EU’s recent carbon tax on imported goods. This initiative aims to level the carbon price between European producers and those beyond the EU.

Starting in October this year, companies will need to gather data on the embedded emissions of imported products, with reporting commencing by the end of January 2024. These regulations will apply during CBAM’s transitional phase until the end of 2025.

CBAM, adopted by the EU earlier in the year, addresses “carbon leakage,” where companies move emissions-heavy production to countries with looser environmental policies. This mechanism will align the carbon price paid by EU products under the EU Emissions Trading System with that paid for products from other countries. Importing companies will need to purchase CBAM certificates to bridge the pricing gap.

Importers must now report on embedded emissions of goods brought into the EU. Details include the product’s origin, production facility location, and primary emission source coordinates. Reports encompass both direct emissions, expressed as CO2e per tonne, and indirect emissions, involving electricity consumption during production.

Initially, CBAM applies to specific products in carbon-intensive sectors, like steel, cement, and electricity. During the transitional phase until 2026, importer obligations are limited to emissions reporting.

The EU Commission has also released guidance to assist importers and foreign producers in implementing these rules. It’s currently developing dedicated IT tools, training resources, webinars, and tutorials to facilitate the necessary calculations and reporting.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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