EU Green Deal and Green Customs in 2024

The first CBAM report submission deadline of January 31, 2024, approaches swiftly! Commencing October 1, 2023, the European Union's Carbon Border Adjustment Mechanism (CBAM) entered a transitional phase extending until the close of 2025. Throughout this period, importers of specific goods from non-EU countries must report the embedded emissions of their imports to the European Commission. Initially, this phase entails statistical reporting; however, from 2026 onwards, importers will be mandated to purchase and surrender CBAM certificates, effectively enforcing a carbon price aligned with the EU ETS allowance price level.

CBAM's initial coverage includes electricity, aluminium, iron and steel, cement, fertilizers, and hydrogen imports. These imports will face a carbon levy by 2026, calculated based on their embedded emissions during production. Expectations suggest an expansion of this scope in the forthcoming years, necessitating proactive preparation by companies.

Importers are strongly encouraged to initiate customs data collection for a comprehensive risk assessment in readiness for the initial CBAM report, due by January 31, 2024. Our KPMG specialists stand ready to provide detailed guidance and pragmatic insights to navigate these new regulations effectively.

On June 29, 2023, the European Union introduced a pivotal regulation aimed at mitigating the EU market's impact on global deforestation and forest degradation (the "EUDR").

This Deforestation Regulation mandates that companies involved in the trade of cattle, cocoa, coffee, oil palm, rubber, soya, wood, and their derivative products conduct extensive due diligence across their value chains. The objective is to ensure that these goods do not originate from post-December 31, 2020, deforestation, forest degradation, or breaches of local environmental and social laws.

Companies are strongly advised to proactively assess the implications of the EUDR on their supply chain operations in preparation for the obligations taking effect from December 30, 2024.

Authors: Frederik Cappelle, Head of Customs & Nick Toremans, Sr. Manager