CBAM and the Fracture of Global Industrial Trade

What are Dual Product Streams? Is it possible that some global manufacturers, to comply with CBAM, start producing low-carbon goods exclusively for the EU while maintaining higher-emission production for their domestic market or for exports to countries without such regulations? The practice of splitting production standards into ‘green products’ for markets with carbon pricing mechanisms […]

CBAM – The last hope

The EU’s strategy to initiate a global carbon tax movement The latest climate models suggest that a worldwide carbon tax is essential to limit global warming to under 2°C, a limit strictly outlined in the Paris Agreement and defined by the scientific community as the threshold before irreversible and catastrophic weather events would start. A […]

Who must file the report? Defining the CBAM Role

With the first reporting deadline for the Carbon Border Adjustment Mechanism (CBAM) literally around the corner, due on January 31st, it is crucial for importers and representatives to clearly determine who bears the responsibility for submitting the CBAM report, both in the short and in long term.

Before diving into the main topic of this blog, it is worth mentioning that the first three reports – the third due on July 31st, 2024 – are simplified versions, as purely based on data retrievable from the customs declarations and the official EU default values. Starting from the report due on October 31st, 2024, supplier engagement data such as contact details and real factory emission intensities will become mandatory. While importing companies might currently prefer to outsource their CBAM reporting to their direct or indirect representatives, the supplier engagement, probably the most time-intensive part, might still lie under their responsibility.

Still did not submit your CBAM report?

Why CBAM?
As the first reporting deadline of the EU Carbon Border Adjustment Mechanism (CBAM) on January 31st, 2024, rapidly approaches, businesses in the EU are gearing up to meet this new regulatory challenge. CBAM is a pivotal moment in worldwide climate-related policy initiatives, as companies importing certain commodity goods into the EU must report the greenhouse gas emissions deriving from their international production processes, for the first time in history.

Fully understanding and complying with these regulatory requirements becomes a critical work in any involved company in order to avoid incompliance. In fact, fines can range from 10 to 50 EUR per tCO2. Don’t know what that means in your case? We are here to assist you.

The Rise of International Carbon Taxation

Introduction

Since 1988, scientists have been sounding the alarm on climate change and its potentially catastrophic consequences. Yet, international political efforts have largely failed to bend our emission trajectory. Multilateral agreements such as the UNFCCC, the Kyoto Protocol and the Paris Agreement were important steps forward, but mostly only created a rising awareness of a problem that was yet to be tackled.

New hope rose in July 2021, when the EU mandated the European Climate Law, making its 2050 net zero target and a 55% decrease by 2030 legally binding. In response, businesses also set their net zero targets. The only problem was that 2050 was still very far away.

CBAM: 4 key pillars of preparation

Introduction

The European Union’s Carbon Border Adjustment Mechanism (CBAM) represents a bold step towards climate-conscious trade and production. Its objectives aim not only to reduce carbon leakage but also to establish a fair global carbon market. However, as a complex unilateral administrative framework, the CBAM places significant reporting requirements on the industries it covers, presenting both challenges and opportunities.

These obligations demand precision and attention to detail, as the data will not only determine the payable CBAM Certificates, but also form the basis of accurate carbon accounting and carbon tax exposure measurements. A key component of this process is the ability to precisely calculate direct and indirect emissions since they both are directly related to expenditures. This requirement underscores the importance of sophisticated and reliable measurement methodologies and, in some cases, may require investment in new integral and automated technology. Equally crucial is the obligation to report on carbon prices paid abroad, a task that necessitates a keen understanding of foreign jurisdictions’ carbon pricing systems.

CBAM: Navigating the Why, When and What

Key takeaways

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a crucial component of the EU’s strategy to achieve Europe’s legally binding net zero targets, avoid carbon leakage and incentivize international decarbonization. It will primarily affect importers and manufacturers in industries such as cement, fertilizer, iron, steel, aluminum, hydrogen, and electricity production.

Since its official publication on May 16, 2023, the CBAM Regulation has been supplemented with numerous new rules and additional specifications, further complicating the regulatory landscape. The specific regulation for the transitional period was released on June 13, followed by the comprehensive rules on supplier emission reporting and the overwhelming communication template