CBAM is a mechanism for carbon adjustment at the EU borders. The mechanism ensures that the import of carbon-intensive goods will also be financially burdened with the mandatory purchase of CBAM certificates. The EU aims to ensure equal treatment of carbon-intensive goods regardless of whether they are produced in the EU or third countries. Carbon-intensive goods include: cement, electricity, fertilizers, iron, steel, aluminum, and chemicals. During the transition period (from October 1, 2023, to December 31, 2025), liable persons will only report the amount of greenhouse gases resulting from the production of carbon-intensive goods. The transition period will be followed by the final period (from January 1, 2026, onwards), when the import of carbon-intensive goods will be burdened with the mandatory purchase of CBAM certificates. This article will provide a detailed overview of the obligations of liable persons during the transition period.

 

Liable Person (Articles 2 and 8 of Implementing Regulation 2023/1773)

 

Liable persons for submitting a CBAM report are:

a) The importer, if they submit a customs declaration in their own name and for their own account (the importer carries out customs procedures independently, without an intermediary);

b) An indirect customs representative, if they submit a customs declaration in their own name and on behalf of an importer based in third countries (the importer appoints an indirect    customs representative or freight forwarder to carry out the customs procedure for importing goods, field 14 of the import customs document indicates code and the name, address, tax number of the representative);

c) An indirect customs representative, if they submit a customs declaration in their own name and on behalf of an importer based in the EU (the importer appoints an indirect customs representative or freight forwarder, similar to point b). If the indirect customs representative does not want to assume the obligations of CBAM reporting, they must officially notify the importer based in the EU. In this case, the importer based in the EU is liable for reporting.

d) The importer, if a direct customs representative submits the customs declaration on behalf of and for the account of the importer (the importer appoints a direct customs representative or freight forwarder to carry out the customs procedure for importing goods, field 14 of the import customs document indicates code and the name, address, tax number of the importer).

 

Carbon-Intensive Goods (Annex 1 to Regulation 2023/956)

 

Carbon-intensive goods include goods from Annex 1 to Regulation 2023/956: cement, electricity, fertilizers, iron and steel, aluminum, and chemicals. Annex 1 further specifies goods with combined nomenclature (CN) codes. Liable persons can easily check whether they are required to submit a CBAM report by comparing the tariff code in field 33 of the import customs declaration with the list of goods in Annex 1. If the imported goods are listed in Annex 1, a CBAM report must be submitted.

 

CBAM Report (Articles 8 and 9 of Implementing Regulation 2023/1773)

 

The liable person must submit a quarterly CBAM report no later than one month after the end of each quarter. In case of an error, the liable person can correct the already submitted CBAM report within two months after the end of the quarter. Corrections of the first two quarterly reports can be made until the deadline for submitting the third CBAM report. The deadlines for submission and correction of CBAM reports are listed in the table below.

A liable person who did not import carbon-intensive goods in a given quarter is not required to submit a CBAM report (question 31 on page 18 of the Carbon Border Adjustment Mechanism (CBAM) Questions and Answers document).

 

Table: List of CBAM reports in the transition period with deadlines for submission and correction of CBAM reports

No.	Reporting Period	Deadline for Report Submission	Deadline for Report Correction
1.	1.10.2023 – 31.12.2023	31.1.2024	31.7.2024
2.	1.1.2024 – 31.3.2024	30.4.2024	31.7.2024
3.	1.4.2024 – 30.6.2024	31.7.2024	31.8.2024
4.	1.7.2024 – 30.9.2024	31.10.2024	31.11.2024
5.	1.10.2024 – 31.12.2024	31.1.2025	28.2.2025
6.	1.1.2025 – 31.3.2025	30.4.2025	31.5.2025
7.	1.4.2025 – 30.6.2025	31.7.2025	31.8.2025
8.	1.7.2025 – 30.9.2025	31.10.2025	30.11.2025
9.	1.10.2025 – 31.12.2025	31.1.2025	28.2.2025

 

 

Data for Preparing the CBAM Report (Articles 3 and 4 of Implementing Regulation 2023/1773)

 

For the correct preparation of the CBAM report, the liable person must obtain the following information from their supplier or the operator of the facility where the carbon-intensive goods are produced:

1. Direct emissions of the facility,
2. Indirect emissions or electricity consumed by the operator in the production of carbon-intensive goods,
3. Emissions of input materials (optional, but recommended for easier control of data accuracy), and
4. Any additional parameters required for a specific group of carbon-intensive goods.

The methods for calculating emissions are prescribed in Annex 3 of Implementing Regulation 2023/1773. Understanding the prescribed methods requires certain technical knowledge about the production processes of individual goods. Until July 31, 2024, liable persons can use any method for calculating emissions. According to the European Commission’s information, most liable persons have opted for simplification. They used default values for calculating emissions, which are available on the CBAM website (Default values transitional period). Liable persons will be able to use default emission values for the first three CBAM reports. For the preparation of the fourth CBAM report (period July-September 2024), liable persons will need actual emission data provided by operators.

To make reporting as simple as possible, the European Commission has prepared an Excel file in which operators enter the required data for calculating emissions. Liable persons transfer data from the Excel file into the CBAM application for submitting CBAM reports. The Excel file is available on the CBAM website under the title “CBAM communication template for installations.” The European Commission has also prepared examples of emission calculations by sector, which are also available on the CBAM website under the title “CBAM Communication template – Examples.”

 

CONCLUSION

 

Importers (liable persons) are advised to answer two questions before starting CBAM reporting:

1. Do I import carbon-intensive goods?
2. Am I liable for CBAM reporting?

If the liable person answers both questions affirmatively, they are required to submit a CBAM report. In the next step, the liable person arranges access to the CBAM application or authorizes another person to submit the CBAM report. The liable person receives data for preparing the CBAM report from the supplier or the operator of the facility in the third country.

Proper and timely communication between the liable person and the operator is key to a correct and timely submitted report. Failure to submit a CBAM report is punishable by a fine ranging from 10 to 50 EUR per ton of unreported emissions.

 

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