With the Carbon Border Adjustment Mechanism (CBAM), energy-intensive products that are imported into the EU are labelled with a CO2 price that corresponds to goods produced within Europe.
The European Emissions Trading System (EU ETS) already obliges the European energy sector, energy-intensive industries and intra-European air transport to pay a CO2 price for the emissions they produce. The phased introduction of the CBAM is intended to prevent the production of European goods from being outsourced to countries with low CO2 taxes (carbon leakage).
Developments in the transition phase until 2034
The emissions trading phase begins on 1 January 2026, until which time the transition phase applies, in which quarterly reporting is mandatory for affected goods, but no financial obligations arise from the purchase of CBAM certificates. The CBAM will be successively expanded from 2026 to 2034. At the same time, free allocation in the EU ETS for these sectors will be gradually abolished by 2034.
From the third quarter of 2024, it will no longer be possible to use default values for the specific CO2 emissions of imported goods. Importers of CBAM goods are therefore generally obliged to report the CO2 values for imported goods based on the suppliers' actual data. This means that suppliers must carry out a CO2 calculation for their goods, taking into account the emissions from the upstream value chain. The responsibility for complete and correct CBAM reporting remains with the importer.
Hanno Bötel
Partner, Audit
KPMG AG Wirtschaftsprüfungsgesellschaft
Chart (in German only)
The CBAM report can be corrected up to one month after submission. The CBAM reports do not have to be verified externally during the transition period until 2025. Incomplete or incorrect reports may nevertheless be subject to a correction procedure.
If the European Commission classifies the submitted reports as incorrect or incomplete, a correction procedure is initiated via the national competent authority - in Germany the German Emissions Trading Authority. The Implementing Regulation provides for penalties of between EUR 10 and EUR 50 per tonne of unreported or incorrectly reported emissions.
What aspects should importers of CBAM goods and their suppliers pay particular attention to during the reporting phase?
Experience from the first reporting periods shows that the stakeholders involved have different hurdles to overcome in the context of CBAM reporting.
- Taking into account the interdependencies between the specialist areas of purchasing, customs, sustainability, environmental and energy management and sales: How can the CBAM reporting obligations be best integrated into existing processes and scaled to the size and business activities of the company?
- How can a low supplier response rate and the potential risk of an incomplete CBAM report be dealt with?
- How can a plausibility check of the reported CBAM information be organised?
- What can be done to motivate suppliers in third countries to provide complete, accurate and timely CBAM information without an escalation having a negative impact on business relationships?
- Can existing CO2 calculations according to other standards be used? How do the CBAM system limits differ from other CO2 calculations (e.g. according to the Greenhouse Gas Protocol)?
- Is there any support available from the importer if the documents and calculation files sent are not comprehensible?
- How do you deal with suppliers who do not have energy-intensive production in a third country, but are primarily active as traders?
- How are missing processes for energy recording at production level dealt with?
How can a complete and correct report be submitted despite the current challenges?
These are success factors for CBAM compliance:
Establishment of an internal CBAM organisation including a plausibility check of incoming emissions data in order to identify errors and data gaps at an early stage.
Set up emergency processes in the event of missing or incomplete supplier data.
Integrate a multi-level communication approach with suppliers, including training to apply CBAM regulations correctly.
Provide application aids so that energy and emissions data can be recorded as simply and efficiently as possible.
Ensure ongoing monitoring of information on EU-wide and national CBAM portals.
Our experts from the Energy Markets & Regulation division have supported numerous companies subject to reporting requirements since the introduction of CBAM. We are happy to provide you with customised support and help your company to implement the CBAM requirements efficiently, taking into account your business activities and existing structures. To this end, our experienced team can draw on solutions developed in-house for various customer requirements when determining emissions data and reporting. Get in touch with us.
