The implementation rule governs the reporting obligations of EU importers of goods affected by the CBAM that apply during the transitional period of 1 October 2023 – 31 December 2025. The following goods are subject to the new measures during the transitional phase: cement, iron and steel, aluminum, fertilisers, electricity and hydrogen and certain precursor goods—all goods that pose a significant risk of leakage. As from 1 October, traders must report on the direct and indirect greenhouse gas emissions embedded in their imports subject to the CBAM but do not have to make any financial adjustments. Affected importers must file a quarterly report by the end of the month following the relevant quarter (the first time by 31 January 2024) through a transitional register established by the European Commission. The Commission has developed a transitional registry to help importers perform and report as part of their CBAM obligations. Registry access can be obtained by making a request to the national competent authority of the EU member state in which the importer is established.
The Implementing Regulation also provides detailed information on the methods for calculating embodied emissions and, for the first year, allows importing companies to choose between three reporting methodologies:
- Communication according to a new methodology (EU method);
- Report based on equivalent national systems of third countries; or
- Relationships based on reference values.
Until 31 July 2024 importers, if the information is not available, they may use other methods to determine emissions, including the default values made available and published by the Commission for the transitional period or any other values determined in accordance with the methodologies set out in the Regulation. Only the EU method will be allowed as from 2025. Penalties will be imposed for non-submission or incomplete submission of the quarterly report.
At the end of the transitional period, the EU will carry out a review of the functioning of the CBAM and will conduct an analysis based on the data collected aimed at assessing the sectors to which the CBAM should be extended, as well as any necessary changes.
The permanent CBAM system will become effective on 1 January 2026, at which time importers will be required to declare annually the quantity of goods imported into the EU in the preceding year and their embedded greenhouse gas emissions and comply with the related payment system based on CBAM certificates.
Source: BDO Global