Do you source products from carbon-intensive industries, such as aluminum, iron, steel, or cement? From October 1, 2023, are subject to new obligations when bringing goods into the customs territory of the European Union under CBAM. One of the obligations during the transitional period is the quarterly CBAM report. How to fulfill CBAM reporting obligations?
CBAM report – carbon commodity reporting
CBAM (Carbon Border Adjustment Mechanism) is a mechanism for adjusting prices at borders, taking into account carbon emissions. This tool serves the European Union in achieving the goal of the Fit for 55 package, which is the EU climate declaration for 2030 on the way to climate neutrality.
The mechanism for adjusting border prices, considering carbon emissions, imposes on importers (and other entities) the obligation to pay carbon fees on importing certain non-EU goods and to prepare reports.
What are CBAM goods?
CBAM applies to goods imported into the EU (including Switzerland, Liechtenstein, Norway, and Iceland) from energy-intensive industries such as:
- artificial fertilizers and nitrogen products
- steel and steel products, iron
- electricity
- aluminum
- cement
- hydrogen.
CBAM rules apply to you if:
- you import the above products
- you place products containing specific raw materials on the EU market
- you use CBAM products as raw materials in inward processing.
Please note that there are exceptions to the CBAM reporting obligation, for example, for goods worth up to €150 and for returned consignments.
From 2026, only if you have the status of an authorized CBAM declarant can you import CBAM goods.
CBAM implementation
The implementation process of the CBAM tool will be completed in 2034. The transitional period is from October 1, 2023, to December 31, 2025. During this period, importers of CBAM goods must submit reports. There is no carbon tax during this period.
Do I need to register as an importer of CBAM goods?
Those declaring goods to CBAM must register in the CBAM electronic register. It will be available from January 1, 2025.
Where can I submit my CBAM report?
Until the official CBAM register is launched, CBAM reports can be submitted to the transitional e-register. Access to the register must be requested through the competent national authority of the Member State where the importer is established.
Deadline for submitting CBAM reports during the transitional period
Importers of CBAM goods to the EU, their indirect customs representatives, persons authorized to lodge a customs declaration under CBAM, as well as indirect customs representatives of non-Union importers are obliged to submit reports.
The CBAM report for the quarter from October 1, 2023, must be submitted by January 31, 2024. Subsequent quarterly reports must be submitted by the end of the month following that quarter. The last quarterly report is due by January 31, 2026.
What does the CBAM report include?
The applicant provides in the CBAM report, among others:
- date of the report and identification codes
- reporting period
- data of the declarant with reporting obligation
- imported goods covered by the CBAM mechanism along with CN codes
- country of production
- emissions from total imported goods
- quantity of goods (total quantity of each type of goods in megawatt-hours for electricity and tons for other goods, determined for each installation producing the goods in the country of origin)
- direct embedded emissions (actual total embedded emissions, expressed in tons of carbon dioxide equivalent emissions per megawatt-hour of electricity or, for other goods, in tons of carbon dioxide equivalent emissions per ton tons one of each type of goods, calculated in accordance with the method set out in Annex IV)
- indirect embedded emissions (total indirect emissions calculated in accordance with the implementing act)
- emission fee payable (emission fee payable in the country of origin for emissions embedded in imported goods, taking into account rebates or other available forms of compensation).
CBAM goods and carbon emission calculation
The amount of embedded emissions should be calculated according to Annex IV to Regulation 2023/956. The appendix contains methods for determining:
- actual specific embodied emissions for simple goods (produced in a production process requiring only input materials and fuels with zero embodied emissions)
- the actual specific embedded emissions for composite goods
- default values.
Annex IV also lists the conditions of use:
- actual embedded emissions associated with imported electricity
- actual embedded emissions for indirect emissions
- values adapted to a given region of origin.
How to calculate emissions?
The CBAM reporting requirements allow for a choice of methodology regarding the values used to calculate “embedded” emissions from imports during the transitional phase. Annex III to Implementing Regulation 2023/1773 laid down two different mandatory approaches from 2025, based on:
- calculations (emissions are determined based on company activity data)
- measurements (continuous concentration measurements of the relevant greenhouse gases).
To make it easier for importers to comply with the system, the Commission allows other methods to be used to calculate specific embedded emissions related to goods produced in an installation up to a specific date:
- until December 31, 2024
- a system for setting fees for greenhouse gas emissions in the place where the installation is located or
- a mandatory emissions monitoring system at the site where the installation is located or
- emission monitoring system in the installation
- until 31 July 2024, a notifier with insufficient information may use other methods for determining emissions, including the default values made available and published by the Commission for a transitional period or any other default values set out in Annex III.
Altering CBAM reports
Submitted CBAM reports may be modified for two months after submission. In addition, reports for the first two reporting periods may be modified until the third report is due. Any requests to update reports after the deadline are evaluated for one year from the submission of the report.
What happens if I do not submit my CBAM report?
If you do not submit the CBAM report or do it incorrectly, you are exposed to financial penalties. Fines are 10-50 euros for each ton of unreported embedded emissions. Harsher penalties will be applied to entities that submit more than two incomplete or incorrect reports in a row or fail to submit a report for more than half a year.
Step-by-step CBAM procedure during the transitional period (October 2023-December 2025)
- The importer (declarant) receives CBAM goods from outside the EU and EFTA countries (Switzerland, Liechtenstein, Norway, Iceland).
- The importer of CBAM goods submits a regular customs declaration (clears the goods).
- The customs authority (or the IT system used) informs the European Commission (using the CBAM transitional register) about imports under CBAM. This information can then be used to check the completeness and accuracy of CBAM’s quarterly reports.
- The notifier requests relevant data on specific embedded emissions of imported CBAM goods from operators (suppliers). The operator shall make the data available, whenever possible, using the Commission’s template provided for this purpose. An authorized person may voluntarily verify data.
- The declarant shall submit the quarterly CBAM report to the CBAM transitional register.
- Information is exchanged between the Commission and the competent authorities in the EU Member States. The importer may be called upon to make corrections under penalty/sanction.
Note that implementing acts may further specify the rules arising from the CBAM. We recommend keeping up to date with the official channels of the relevant authorities.
For more information, read the CBAM instructions for importers prepared by the European Commission.