The EU Commission proposes to simplify its Carbon Adjustment Mechanism (CBAM) as the regulatory framework enters the last year of its transitional period.
The proposal is part of the ‘Omnibus’ packages announced in February which are aimed at creating a more favourable business environment for EU companies. The proposed changes to CBAM would still concern “around 99% of emissions […], while exempting 90% of the importers”.
What is CBAM?
CBAM is part of the EU’s strategy to advance its ambitious climate objectives and cut carbon emissions. It specifically deals with the EU’s “carbon leakage” problem – when businesses decide to move production to countries with cheaper production costs which typically also have looser carbon regulations. Through CBAM, the EU levels the playing field by pricing the carbon content of specific imports. This in turn, encourages cleaner industrial production both within and outside EU borders.
What are the proposed changes?
The Commission has used CBAM’s transitional period to explore the framework’s issues jointly with stakeholders, leading to the following proposed changes:
- A de minimis threshold exemption of 50 tonnes will focus the regulation on big importers and relieve small importers, such as SMEs and individuals, of the regulatory burden.
- Easier compliance criterion for CBAM obligations, including simplified declarant authorisation, emissions calculations and the management of financial liability, will streamline third-party outsourcing.
- Stronger anti-abuse provisions and joint strategies with national authorities will ensure that big importers comply with the regulation.
Overall, the proposed changes will improve CBAM compliance by making the regulations easier to navigate. Although, potential extensions to other sectors, downstream goods and indirect emissions in this year’s upcoming final review may mean additional layers of compliance are still to come.
How can Valpak Help?
Our Consultancy team is here to make CBAM compliance straightforward, allowing you to focus on your core business.
Our tailored support includes the following:
- Compliance assessments: Evaluate your obligations under CBAM.
- Data management and verification: Manage and check emissions data with precision, reducing administrative burden.
- Supplier Engagement: Direct support in contacting and exchanging with suppliers to retrieve quality data.
- Submission assistance: Support you in preparing the necessary reports for CBAM compliance, ensuring all submissions are accurate, timely, and complete.
- Support with CBAM adjustments: As the EU revises CBAM criteria over time, Valpak will keep you updated on changes and help adjust to new requirements, avoiding penalties or disruptions to trade
For additional information on key CBAM dates and what lies ahead, please see our article on Decoding CBAM here.
Do you think your business is obligated under CBAM? Take our online quiz to find out!
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