Is your business ready for the EU's Carbon Border Adjustment Mechanism (CBAM)?
The CBAM intends to combat ‘carbon leakage’ (a situation where businesses relocate to countries with less stringent climate policies, thereby increasing global emissions) and encourage cleaner industrial production in nations outside the EU, while protecting its climate policy ambitions. This will be achieved by adding fees to import in-scope goods into the EU.
The EU CBAM Regulation will obligate any businesses importing CBAM goods into the EU.
The industries considered ‘in-scope’ are importers of cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen. For instance, this could include raw materials like iron ore or finished goods like steel beams.
The EU CBAM legislation was officially passed in May 2023, and its transitional period began on 1 October 2023 and ran until 1 January 2026.
Until the end of the transitional phase, importers of any in-scope goods must submit CBAM reports containing import data for every quarter from 1 October 2023.
As of 1 January 2026, when the definitive period commences, reporting declarants will be required to purchase and surrender CBAM certificates alongside their reporting obligations.
The ‘reporting declarant’ is the importer of the CBAM goods and, in principle, the responsible entity for submitting quarterly CBAM reports during the transitional period. This means that as the importer, you are responsible for accurately reporting the emissions associated with the goods you bring into the EU.
During the transitional period, affected businesses will be required to report on their embedded direct/indirect emissions, the quantity of affected goods, and their country of origin.
Quarterly CBAM reports must be submitted to the CBAM Transitional Registry, which the European Commission manages. The CBAM Transitional Registry is a standardised and secure electronic database containing a trader portal.
Valpak offers a comprehensive range of support services to help you meet your CBAM needs and ensure full compliance with the regulations. Our tailored support includes the following:
The EU CBAM impacts any businesses that import CBAM goods into the EU. The reporting obligation will stand if the UK business acts as an importer in its name in the EU.
The CBAM initially applies to imports of goods in the following sectors:
These sectors were initially chosen due to their high risk of carbon leakage.
The EU CBAM Regulation applies to CN codes (Combined Nomenclature), an EU eight-digit coding system used to help the EU’s common customs tariff and provides statistics for trade within the EU and around the world. The list of goods that must be reported can be found in Annex I of the CBAM Regulation.
Reporting of embedded emissions in CBAM goods is compulsory during the transitional period. Reporting declarants may face penalties ranging between EUR 10 and EUR 50 per tonne of unreported emissions, underscoring the seriousness of non compliance.
In the case of missing, incorrect, or incomplete CBAM reports, the National Competent Authority (NCA) may initiate a correction procedure, granting reporting declarants the possibility to rectify potential errors. If the reporting declarant does not take this action, penalties will follow.
Each EU member state has a National Competent Authority (NCA) that is responsible for checking the quality of the quarterly CBAM reports that companies within their respective states submit.
NCAs will engage with reporting declarants in their respective states, creating a dialogue to try and resolve any issues surrounding CBAM reporting submissions.
NCAs ensure that reporting declarants in their member state comply with CBAM rules and will enforce penalties for non compliance.
On 22 December 2023, The European Commission published default values that can be used by businesses to determine their embedded emissions in imported goods covered by CBAM during the transitional phase.
Default reporting values are particularly important during the transitional period as importers may not have all the necessary information to complete their CBAM reports accurately.
During the first three quarterly reports (Q4 of 2023 and Q1&Q2 of 2024), declarants may report their embedded emissions based on default values supplied by the European Commission without quantitative limit.
Moving forward from Q3 of 2024 up until the end of the transitional period at the end of 2025, declarants can report emissions based on estimations but only for complex goods and with a limit of 20% of the total embedded emissions.
The EU aims to set the default values higher than the average actual value to create an incentive for declarants to use actual values.
| Reporting Period | Submission Due By | Modification Possible Until |
| 2023: October – December | 2024: 31 January | 2024: 31 July |
| 2024: January – March | 2024: 30 April | 2024: 31 July |
| 2024: April – June | 2024: 31 July | 2024: 30 August |
| 2024: July – September | 2024: 31 October | 2024: 30 November |
| 2024: October – December | 2025: 31 January | 2025: 28 February |
| 2025: January – March | 2025: 30 April | 2025: 31 May |
| 2025: April – June | 2025: 31 July | 2025: 31 August |
| 2025: July – September | 2025: 31 October | 2025: 30 November |
| 2025: October – December | 2026: 31 January | 2026: 28 February |
The EU CBAM Regulation mostly applies to basic materials and basic material goods such as steel or cement. However, there are a limited number of finished products that fall under the scope of the EU CBAM.
These finished goods can be found in Annex I of the CBAM Regulation.
The de minimis exemption applies to consignments in which the total intrinsic value of the CBAM goods does not exceed EUR 150. If the overall value of the total CBAM goods in one consignment is below EUR 150, then the de minimis exemption applies and there is no CBAM obligation.
Contact us to understand CBAM and learn how we can simplify your path to compliance.