Regulation 2023/956 of the European Parliament and of the Council of May 10, 2023, published in the Official Journal of the European Union on May 16, 2023, implements the Carbon-Boundary Adjustment Mechanism (CBAM) as part of the "Objective 55" legislative package, the ultimate goal of which is climate neutrality in the EU by 2050 at the latest.
What is CBAM?
CBAM is a climate-friendly measure aimed at addressing the risk of carbon leakage, which occurs when, for cost reasons arising from climate policies, companies in certain industrial sectors relocate their production to other countries, or when imports from these countries replace equivalent products that are less intensive in terms of greenhouse gas emissions.
Specifically, the CBAM is a control regulation on certain greenhouse gas emitting industrial goods, originating in and coming from third countries, imported into the customs territory of the Union.
Who is affected?
To all those who import the products concerned into the Union. In case the importer of the goods into the EU customs territory is not an operator established in this territory, the customs representative (acting under the indirect representation modality) will be the operator responsible for the compliance with the CBAM Regulation of the imported goods.
Which products are affected?
The products affected by the CBAM identified through the EU Combined Nomenclature are those belonging to the aluminum, cement, electricity, fertilizers, hydrogen and organic chemical products sectors, whether they are presented as inputs or as processed products.
It is important to mention that, despite the limited scope of products affected by the CBAM Regulation, the ultimate objective of the CBAM Regulation is to broaden the scope of affected products to include all those goods that are precursors of greenhouse gas emissions.
What are the CBAM obligations?
The CBAM is a regulation applicable to imports of the products concerned, originating in third countries, whose full and effective application (as of January 1, 2026) will consist of the following: obtaining prior import authorization, management and submission of declarations and reports, registration and maintenance in the corresponding registry, as well as obtaining and validating the corresponding CBAM certificate.
However, during the transitional period, i.e. from October 1, 2023 to December 31, 2025 and, pending the adoption of the appropriate delegated acts, importers into the EU of the products concerned, originating in third countries (except Iceland, Liechtenstein, Norway, Switzerland), only, will be obliged to submit quarterly descriptive reports of the goods imported into the customs territory of the EU.
These reports shall include, among other information, the total direct and/or indirect greenhouse gas emissions (depending on the CBAM product concerned), as well as the carbon prices payable in the country of origin of the imported goods, information which shall be provided by the supplier/manufacturer of the imported goods but which, in any case, shall be the responsibility of the importer established in the customs territory of the EU.
Failure to comply with CBAM obligations (including the transitional obligation to report quarterly information related to imported goods) will result in the payment of a penalty.
Despite having the appearance of a non-tariff regulation, the CBAM Regulation will have financial effects for importers in the Union of the affected goods, both because of the control measures to be implemented and the costs arising from the CBAM Regulation.
How can we assist you?
We recommend that foreign trade operators in the affected sectors and products (directly and indirectly) take the necessary preventive actions to ensure transitional and definitive compliance with the CBAM Regulation.
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