Carbon Border Adjustment Mechanism (CBAM) Compliance
As from October 1, 2023, Regulation 2023/956 introduced the EU’s Carbon Border Adjustment Mechanism (CBAM) with the objective to reduce carbon emissions, put a fair price on the carbon emitted during the production of carbon intensive goods imported into the EU and encourage a cleaner industrial production through a methodology for calculating embedded emissions according to the Paris Agreement and the EU Fit for 55 package.
This mechanism will be implemented in phases and is aligned with the phase-out of the allocation of free allowances set in the EU Emissions Trading System (ETS).
The EU’s Carbon Border Adjustment Mechanism (CBAM) is expected to be fully in place as of 2026, but initially it will only apply to a certain number of products with a high risk of carbon leakage such as
- iron / steel
- aluminum
- hydrogen
- electricity
In line with Regulation (EU) 2023/956, Implementing Regulation (EU) 2023/1773 lays down rules for reporting obligations on the quantity of imported goods, direct and indirect emissions embedded in them, and any carbon price due for those emissions.