The beginning of the Carbon Border Adjustment Mechanism (CBAM), linking import tariffs and carbon emissions.

From 1st October 2023, the European Union began the Carbon Border Adjustment Mechanism (CBAM) transition phase. But what is it, and how does it affect you?

CBAM was created following the ‘For for 55 Agenda’ introduction, an EU-led package to accelerate GHG emission cuts. The purpose of CBAM is to place a price on goods entering the EU relating to the carbon emissions released throughout manufacturing, the aim being to encourage permanent change to greener methods among carbon-heavy industries and prevent the circumventing of CO2 emissions to a location outside of the European Union. CBAM is being introduced in phases beginning in 2023, applying solely to high CO2 emission industries, including cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity, in preparation for full implementation in 2026.

On 1st October, CBAM officially began its transitional phase and, therefore, its road to becoming a key tool in fighting carbon leakage. Throughout this phase, EU importers are required to:

• Record and report their import volumes and all embedded GHG emissions throughout production

• Submit an initial report by 31st January 2024

This transition phase relates to cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.

Collating this information provides valuable insight into embedded emissions, allowing those behind CBAM to refine their methods for the definitive period that begins in 2026. It is expected that upon the onset of the definitive phase, EU importers will be obliged to purchase CBAM certificates, which is determined by the weekly auction price of EU Emissions Trading System (ETS) allowances (€/tonne of CO2 emitted).

To achieve a smooth rollover into the new CBAM transition period and to minimise unwanted disruption, get in touch with Decerna. Decerna has over ten years of experience in conducting Life Cycle Assessment (LCA) studies, which are the evidence base for any CBAM-related information on embedded carbon. If you need any help with your CBAM reporting, we can help you.

For more information, visit Carbon Border Adjustment Mechanism (europa.eu) to see if your business should get started today, and contact Decerna at [email protected] to learn more about how we can help you.

This post was written by Tia Morgan, a Graduate LCA Consultant at Decerna