The European Commission defines the Carbon Border Adjustment Mechanism (CBAM) as a climate measure that has the objective to prevent the risk of carbon leakage and support the EU on climate mitigation, while ensuring WTO compatibility.

Note that this EU legislation is still under preparation.

How the CBAM will work?

EU importers will buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU’s carbon pricing rules. Conversely, once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, the corresponding cost can be fully deducted for the EU importer.

The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in € / tonne of CO2 emitted.

When does it start?

First, there will be a transitional period where importers will have to report emissions embedded in their goods without paying a financial adjustment in a transitional phase starting in October 2023 and finishing at the end of 2025. The first report must be submitted by 31 January 2024. This report covers the information for the period from 1 October to 31 December 2023.

From 2026, authorised CBAM declarant status is required for submitting yearly declarations. Importers based in the EU can either submit declarations personally or use indirect representatives. Authorised CBAM declarants submit annual declarations to the Commission by 31 May each year. For 2026 imports, the first declaration must be submitted by 31 May 2027.

Commodity codes for CBAM products?

Cement

2507 00 80

2523 10 00

2523 21 00

2523 29 00

2523 30 00

2523 90 00

Electricity

2716 00 00

Fertilizers

2808 00 00

2814

2834 21 00

3102

3105 (except 3105 60 00)

Chemicals

2804 10 000 (hydrogen)

Iron and steel

2601 12 00

72 (except 7202 2, 7202 3, 7202 50 00, 7202 70 00, 7202 80 00, 7202 91 00, 7202 92 00, 7202 93 00, 7202 99 10, 7202 99 30, 7202 99 80, 7204)

7301

7302

7303 00

7304

7305

7306

7307

7308

7309

7310

7311

7318

7326

Aluminium

7601

7603

7604

7605

7606

7607

7608

7609 00 00

7610

7611 00 00

7612

7613 00 00

7614

7616