As of October 1, 2023, regulations on the so-called “carbon border tax” or “carbon duty” will take effect in the European Union under Regulation (EU) 2023/956 of the European Parliament and the Council.
The CBAM mechanism is part of the FIT for 55 package and is aimed at adjusting the prices of certain imported goods within the European Union in order to equalize competition between EU products (burdened with CO2-related costs) with imported products (which are not burdened with such costs).
The CBAM regulations will in particular affect the following product groups:
- steel, iron and related products,
- aluminum and related products,
- fertilizers, including ammonia, mineral and chemical fertilizers,
- cement,
- electricity and hydrogen.
The CBAM regulations will come into effect gradually. Formal obligations will first be imposed on importers of the products indicated above, the next stage provides for paying the tax.
The CBAM regulations will gradually be extended to the products of other industries as well.
During the initial (transitional) period, importers of the above products will be required to report quarterly the amount of greenhouse gas emissions generated during the life cycle of the imported products.
After the end of the transition period (i.e., from 2026), CO2 emissions associated with imported products and raw materials will be required to be accounted for, including through the purchase of CBAM certificates (emission allowances).
Importers will also be required to fulfill a number of other formal obligations.
The CBAM regulations for importers of steel, aluminum, fertilizer or cement products mean a number of additional obligations, which it is worth preparing for in advance. Failure to comply can lead to financial sanctions.
If you are an importer of any of them, please contact us and we will help you manage the implementation of the regulations.
