CBAM in effect on 1 October:
make sure you are prepared!

On 1 October 2023, the new C02 duty, the Carbon Border Adjustment Mechanism (CBAM) will be implemented. This duty is being introduced to create a level playing field between products produced in the EU and imported goods. Find out in this article who it affects, which products will be taxed and what to expect.

Who will be affected by CBAM?

The new duty is, among others, important for importers of CBAM goods and customs brokers. This is because it requires certificates that can only be purchased and exchanged by ‘authorised declarants’. This requires a licence and importers/brokers will be subject to administrative obligations. We advise to take timely action in this regard.

CBAM is also potentially important for parties purchasing (imported) non-EU goods from European suppliers. This is because these suppliers will consider passing on the duties, thereby increasing purchase prices.

Which goods are concerned?

CBAM focuses on goods covered by the ETS system within the EU and imported from third countries (non-EFTA). The recently published CBAM regulation identifies six main categories:

• Cement (chapter 25 of the Combined Nomenclature (CN))
• Steel and iron (chapters 72 and 73 of the CN)
• Aluminium (chapter 76 of the CN)
• Electricity (CN Chapter 27)
• Fertilisers (CN Chapters 28 and 31)
• Chemicals (chapter 28 of the CN)

For now, the impact of CBAM will be limited to importers of goods classified in the above categories. The duties do not only cover raw materials but also (semi-)manufactured goods, such as rail tracks, aluminium foil and tanks.

Price of CBAM certificates

The price of CBAM certificates is set on the basis of the price of emission allowances being traded. Here, the average weekly price of EU ETS allowances is used as a starting point for the price of CBAM certificates.

How should the quantity of CBAM certificates be calculated?

The required CBAM certificates are calculated based on the emissions of the goods imported. For this, you can either use actual emissions or default values set by the EU. These default values are higher in almost all cases, so declaring and remitting based on actual emissions could be more advantageous to you.

Timetable

On 1 October 2023, the transition period takes effect: importers will face reporting obligations:

• This involves calculating and recording what the CO2 emissions were in the production of the imported goods.
• This data must be declared quarterly (and no later than one month after the end of the quarter).
• The customs authorities can impose penalties for non-compliance in this regard.
• From 2026, CBAM levies are due on imports of aforementioned goods:
• Importers will have to purchase CBAM certificates and pay them annually on this declaration.

As of 31 December 2024, only authorised declarants will be able to import the above goods.

We advise you to assess the impact of CBAM on your business and take the appropriate actions. This is to avoid unnecessary costs, workload and delays at the border.