As
part of this effort, the European Commission proposed in 2021 a "Fit for
55" package of 12 related measures to ensure that various sectors such as
energy, construction, transportation, and others align with the EU's carbon
reduction goals.
The
"Carbon Border Adjustment Mechanism" (CBAM) is a critical component
of the Fit for 55 package. Its purpose is to prevent the "carbon
leakage" (relocating industrial operations to countries with less
stringent carbon regulations) and undermining carbon reduction efforts in the
EU. CBAM aims to ensure equal treatment for domestic and imported goods while
encouraging producers in non-EU countries to make their production processes
more environmentally friendly, ultimately contributing to the global fight
against climate change.
CBAM
is designed to mirror the EU Emission Trading System (EU ETS). The design of
CBAM is in full compliance with the rules of the World Trade Organization
(WTO).
CBAM
has been gradually implemented since October of this year, and during the
transition period, which runs to the end of 2025, CBAM's regulations will apply
only to six energy-intensive sectors industries: cement, steel, aluminium,
fertilizers, hydrogen, and electricity. During this transition period, EU
importers are required to submit relevant reports and are not obligated to pay
any fees or purchase certificates. The information collected from importers
during the transition period will not be used for enforcement; it will only
serve as basis for analysis.
Starting
from 1 January 2026, when CBAM enters definitive stage, EU importers will be
required to purchase CBAM certificates, and the price of these certificates
will be based on the average auction price of the EU ETS allowances. Non-EU
manufacturers who have already paid a carbon price in their own country can
deduct the corresponding costs from CBAM certificates.
To
ensure the reliability of reported information, after 2026 verification of
emission levels will be carried out by independent verification organizations
accredited under EU regulations.
For
more information and details about CBAM regulations and the reporting system, please
visit the European Commission's Customs and Taxation website at https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
For
online learning courses related to CBAM, please visit the European Commission's
Customs & Tax EU Learning Portal at https://customs-taxation.learning.europa.eu/.