EU: Comments requested on draft implementing regulation of carbon border adjustment mechanism
“First call for feedback” on rules governing implementation of carbon border adjustment mechanism
“First call for feedback” on rules governing implementation of CBAM
The European Commission on 13 June 2023, published a “first call for feedback” on the rules governing the implementation of the carbon border adjustment mechanism (CBAM) during its transitional phase, which starts on 1 October 2023 and runs until the end of 2025.
As noted in an EC release, the draft implementing regulation details the reporting obligations and information sought from EU importers of CBAM goods, as well as the provisional methodology for calculating embedded emissions released during the production process of CBAM goods.
In the CBAM’s transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. This will give time for businesses to prepare and will provide the necessary information to fine-tune the definitive methodology by 2026.
The draft implementing regulation provides for some flexibility when it comes to the values used to calculate embedded emissions on imports. During the first year of implementation, companies will have the choice of reporting in three ways:
- Full reporting according to the new methodology (EU method)
- Reporting based on equivalent third country national systems
- Reporting based on reference values
As of 1 January 2025, only the EU method will be accepted.
This gradual approach will give producers time to adapt in a predictable manner. The Commission is also developing dedicated IT tools to help importers perform and report these calculations, as well as in-depth guidance, training materials and tutorials to support businesses when the transitional mechanism begins. While importers will be asked to collect fourth quarter data as of 1 October 2023, their first report will only have to be submitted by the end of January 2024.
In a fully transparent process, the Commission informally consulted an expert group with the full involvement of third countries, stakeholders and industry while preparing the reporting obligations.
Feedback is welcome from business, academia, and the general public until 11 July 2023. Stakeholders are asked to focus their feedback on the specific implementing rules contained in the draft legislation, rather than on the CBAM regulation itself.
Next steps
The implementing regulation will be formally adopted by the Commission later this summer after a vote in the CBAM Committee, composed of representatives from EU Member States.
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