Accurate CBAM Reporting with Zero Hassle & Zero Delay

The Carbon Border Adjustment Mechanism (CBAM) is a policy initiative by the European Union (EU) designed to place a carbon price on imports of certain goods. This mechanism ensures that imported products are subject to the same carbon costs as those produced within the EU, thereby preventing "carbon leakage," where companies might relocate production to countries with less stringent emissions regulations.

CBAM initially targets imports of specific carbon-intensive products, including:

Steel and iron
Aluminum
Cement
Fertilizers
Electricity

These sectors are prioritized due to their significant carbon emissions during production.

CBAM is being implemented in phases:

‍Transitional Phase (2023-2025): During this period, importers are required to report the embedded emissions in their products but are not yet obligated to make financial adjustments.

Full Implementation (from 2026): Importers will need to purchase CBAM certificates corresponding to the embedded emissions of their imported goods, effectively paying a carbon price equivalent to that faced by EU producers under the EU Emissions Trading System (ETS).

Importers bringing covered goods into the EU are responsible for compliance. They must report the emissions embedded in their imports and, upon full implementation, purchase the necessary CBAM certificates. This responsibility ensures that the carbon cost is accounted for at the point of entry into the EU market.

Importers are required to calculate and report the actual embedded emissions of their products. Importers must calculate and report the actual embedded emissions of their products using methodologies aligned with the EU ETS framework. If actual data is unavailable:Until 30 June 2024, importers may use default values for up to 100% of specific direct embedded emissions.From July 2024 to December 2025, default values may be used for up to 20% of total embedded emissions for complex goods.For indirect emissions, country-specific electricity emission factors must be applied unless renewable PPAs or direct low-carbon energy sourcing is demonstrated.

Yes, to reduce administrative burdens, the EU has proposed exemptions for imports below certain thresholds. For instance, imports with a total value not exceeding €150 are exempted from CBAM obligations. Additionally, countries with carbon pricing mechanisms equivalent to the EU's may have adjusted obligations under CBAM.

CBAM complements the EU ETS by leveling the playing field between EU producers, who incur carbon costs under the ETS, and foreign producers, who may not face similar costs. As free allowances under the EU ETS are phased out, CBAM ensures that imported goods are subject to equivalent carbon costs, thereby preventing carbon leakage and promoting global emissions reductions.

During the transitional phase (2023-2025), importers must submit quarterly reports detailing the embedded emissions of their imported goods. These reports help the EU monitor and refine the mechanism before full financial obligations commence in 2026.