The European Commission on Aug. 17 announced the adoption of reporting rules for importers of products under the Carbon Border Adjustment Mechanism (CBAM), the EU’s new carbon tax on imported goods aimed at equalizing the carbon price paid by European producers with those outside the European Union (EU).
The new rules will require companies to begin collecting data on the embedded emissions of imported products in October of this year, with reporting beginning by the end of January 2024, and will apply through the transitional phase of CBAM, which runs until the end of 2025. After which, companies are liable to pay carbon tax.
The main purpose of CBAM, adopted by the EU earlier his year (GM April 28, p. 30), is to avoid “carbon leakage,” a situation in which companies move production of emissions intensive goods to countries with less stringent environmental and climate policies.
The CBAM measures under the initial scope of the legislation will apply to the fertilizer, cement, iron and steel, aluminium, electric energy production, and hydrogen sectors, as well as some precursors and a limited number of downstream products.
The EU Commission also published guidance on Aug. 17 to help importers and third-country producers to implement the new rules, and noted that dedicated IT tools to help importers perform and report the required calculations are currently being developed, along with training materials, webinars, and tutorials.
CBAM is one of the key pieces of legislation that form the main thrust of the EU’s flagship “Fit for 55” climate policy package, which aims to cut 2030 greenhouse gas emissions by 55% from 1990 levels.