The Commission Implementing Regulation 2023/1773 from 17 August 2023 provides rules for the implementation of CBAM during the transitional period which runs from 1 October 2023 to 31 December 2025. During this period, importers are required to report carbon emissions of imported goods (“embedded emissions”) quarterly without paying any financial adjustment. No CBAM certificates and no verification of emissions by EU-accredited verifier will be required during the transition period.
Embedded emissions under CBAM are referred to as emissions that occur in the production of goods – these may be direct emissions from the production process and indirect emissions, generated in the production of the electricity used in the production process.
Reporting data
During the transitional period importers and indirect customs representatives are to provide information on inter alia, the following:
- Quantity of imports of each type of goods (MWh for electricity and tons for other goods)
- Combined Nomenclature (CN) codes of the goods
- Country of origin
- Details of the installation where the goods are produced
- Production methods, reflecting the technology used and qualifying parameters
- Direct embedded emissions and indirect embedded emissions of imported goods other than electricity
- The type of applicable reporting methodology
- Carbon price due in country of origin, including reference of the legal act governing the carbon price and the quantity of emissions covered by any free allocations, rebates or other forms of compensation
- Other sector specific information.
The EU Commission has developed and posted on its CBAM webpage a spreadsheet with the data to be shared by the non-EU vendors for the purposes of the CBAM reporting.
Embedded emissions under CBAM are referred to as emissions that occur in the production of goods – these may be direct emissions from the production process and indirect emissions, generated in the production of the electricity used in the production process.
Methodologies for calculation of embedded emissions
There are several methodologies based on which declarants may report the embedded emissions:
- EU methodology: The embedded emission should be calculated either based on (i) calculation-based approach based on activity data which uses the quantities of all fuels and relevant materials consumed and their carbon content (so called “emission factor”) or (ii) measurement-based approach based on continuous measurement of the concentration of the relevant greenhouse gases. As of 1 Jan 2025 only the EU methodology will be accepted.
- Acceptable alternative methodologies (up to 31 Dec 2024): To provide some flexibility during the first 5 quarters of implementation, declarants may carry out the reporting in one of the following three alternatives:
- Carbon pricing scheme where the installation is located,
- Compulsory emission monitoring scheme where the installation is located,
- Emission monitoring scheme at the installation which can include verification by accredited verifier.
- Other non-prescribed methodologies (up to 31 Jul 2024): Declarants may use other non-prescribed methodologies for determining the emissions, including default values.
CBAM quarterly reports
During the transition phase the reporting of embedded emissions in imported goods is quarterly. The filing deadline is one month after the end of the respective quarter, and adjustments may be done within two months of the reporting quarter’s end (for Q4 2023 and Q1 2024 adjustments may be carried out by 30 Apr 2024). Importers should start collecting Q4 2023 data as of 1 October 2023, whereas the first CBAM report is due by 31 January 2024.
A single CBAM report should be submitted for the imports to all EU Member States within the respective quarter, to be filed to the CBAM competent authorities in the country of establishment / EORI registration.
CBAM reports are due only for quarters with reporting transactions. Where there are no embedded emissions for the respective quarter no (nil) CBAM report should be filed.
Penalties
Penalties will be imposed for failure to comply with reporting obligations or incorrect reporting. The penalties are within the range EUR 10 – EUR 50 per ton of underreported embedded emissions, increasing in accordance with the European index of consumer prices. The national authorities will determine the exact penalty. Higher penalties may would apply for omissions in two or more consecutive quarters or the delay in reporting exceeds 6 months.
Transitional CBAM registry
The EU Commission has developed a dedicated webpage of the transitional CBAM registry to facilitate importers carry out their CBAM reporting obligations. Access to the registry should be requested through the national competent authority of the EU Member State in which the importer is established.
