Update CBAM: Real emissions instead of default values

As of the report for Q3 2024 the real emissions must be declared - if necessary, by applying the further simplifications mentioned below. The hoped-for extension of the full use of the default values has not yet taken place. According to Art. 4 para. 3 of the CBAM Reporting Regulation, the use of default values is therefore only permitted until July 31, 2024, and only if no more precise information is available.

The EU Commission understands the legal deadline of July 31, 2024 to be based on the reporting date rather than the import date, see DEFAULT VALUES FOR THE TRANSITIONAL PERIOD OF THE CBAM BETWEEN 1 OCTOBER 2023 AND 31 DECEMBER 2025 (PDF). In this respect, the EU Commission points out that the use of default values is only permitted for the above-mentioned quarters.

Which simplifications remain in force?

• Until the end of 2024, an equivalent method (e.g., existing emissions monitoring system in the country of origin) may be used in addition to the EU method for calculating grey emissions, Art. 4 para. 2 CBAM Reporting Regulation. 
• Until the end of 2025, reporting parties can report estimates of emissions data in the CBAM reports. However, this simplification is limited to complex goods and with an upper limit of 20 % of the total emissions contained, Art. 5 CBAM Reporting Regulation. The use of default values would be classified as an “estimate” by the EU Commission.

With the Carbon Border Adjustment Mechanism (CBAM), the EU introduced a system on 1st October 2023 with which CO2 emissions in selected industries (CBAM goods: e.g., cement, fertilizers, iron, steel, aluminum, and goods made from these) are to be subject to a levy on import. The aim of this system is to compensate for goods produced within the EU that are subject to the emissions trading system, i.e., for which certificates must be purchased. This is intended to prevent companies from relocating their CO2-intensive processes abroad and thus acting contrary to the environmental and sustainability objectives of the emissions trading system on the one hand, and non-EU producers from generating an “unjustified” cost advantage over EU companies at the expense of the environment due to the lack of mandatory participation in the emissions trading system on the other. 
More information on CBAM can be found here. 

What should CBAM obligated parties do now?

• Clarify and ensure the availability of CO2 emissions data from manufacturers / suppliers.
• Define calculation methods for CO2 emissions and check/coordinate any methods used by manufacturers.
• Set up an internal database about the relevant CBAM reporting data (emission values, production data, position data of the production facilities, etc.).
• If not already done: 
  • Implement access to the CBAM transitional register for the submission of reports.
  • Definition and documentation of the internal organizational and operational structure for CBAM (including responsibilities).
  • Review CBAM strategy (affected products, adjustment of sourcing, classification of goods in the customs tariff (relevant for CBAM), etc.).
  • Adjustment of purchasing contracts regarding a CBAM clause.