Carbon Boundary Adjustment Mechanism (CBAM)

CBAM will be rolled out gradually. The first phase is a transitional period (1-10-2023 – 31-12-2025), which is considered a learning phase. During this period, importers must prepare a report calculating the emissions released during the production of the imported goods (hereinafter referred to as "embedded emissions").

These embedded emissions consist of:

1. Direct emissions released from the production process and from the production of heat used in the production process, regardless of the place of production of this heat.
2. Indirect emissions released during the production of electricity used in the production process, regardless of the place of production of this electricity.
3. In some cases, also direct and indirect emissions from the relevant input materials (precursors).

During this phase, these emissions will not yet be collected. However, the authorities can impose a fine if they do not fulfill the reporting obligation. The final phase will then start on 1 January 2026.

• From 2026 to 2033, embedded emissions for CBAM goods will be gradually taxed. The free allocation of quotas within the EU ETS will be phased out.
• From 2034, 100 % of inserted emissions from CBAM goods will be taxed. No free allowances will be allocated for these goods under the EU ETS.

The first phase of the implementation of this mechanism focuses on goods that pose the greatest risk of carbon leakage. These goods are hereinafter referred to as CBAM goods and include the following sectors:

• Cement
• Electricity
• Fertilizers
• Iron and steel
• aluminum
• Hydrogen

If you are importing goods classified in one of the commodity codes (CN codes) listed in this list with a value of more than EUR 150 per shipment, you should continue reading. If your goods do not fall within the scope of this list, you can still continue reading if this topic interests you. (Tim Hesselink, Ton Bendercher, Britt van Beveren, more at lexology.com)