The CBAM scheme to be introduced in 2026 for imports to Norway

The purpose of the scheme is to create a level playing field for industries within the EU/EEA and Switzerland concerning the payment of emission requirements for specific goods. The CBAM tax aims to ensure that countries where industries do not pay for emissions cannot import these goods into the EU/EEA and Switzerland without paying a fee for the emissions.

The CBAM scheme applies to imports of certain types of goods such as cement, electricity, iron & steel, aluminum, hydrogen, and fertilizers. Importers will be required to report and purchase certificates for greenhouse gas emissions associated with the goods from January 1, 2026.

The so-called transition period will be in effect from October 1, 2023, to December 31, 2025. During the transition period, importers of CBAM goods must quarterly report the embedded emissions of the goods without the obligation to pay for the emissions.

It is anticipated that many importers within the EU are still unfamiliar with the scheme, and there is significant underreporting of goods covered by the CBAM arrangement. The threshold value for reporting obligations is set at 150 euros per unit upon entry.

Importers will need to purchase CBAM certificates from the competent authority in their home country. The price of the certificates will be calculated based on a weekly average auction price for the EU ETS allowances, expressed in euros per ton of CO2 emissions.

From May 31, 2027, importers (declarants) must submit a declaration for the previous year (2026). The declaration should show the quantity of imported goods measured in megawatt-hours for electricity or tons for other goods, the embedded emissions in the products measured in tons of CO2 equivalents, and the number of CBAM certificates that need to be surrendered for the emissions. The declaration is to be accompanied by a verification report issued by an accredited verifier.

Importers who can document that the carbon emissions during the production of the goods have already been compensated may adjust the CBAM tax accordingly upon import.

For many importers, obtaining information on emissions associated with the imported goods may be challenging. For these goods, possible reference emissions values have been established, where information about the country of origin is also used as a basis for calculating the CBAM tax.

Importers need to register as importers in a national register as well as in a common CBAM register managed by the EU Commission.

Norwegian industry has a high share of carbon-intensive production and goods import. Norway is currently part of the EU's emission trading system (EU/ETS), a scheme that has positively affected greenhouse gas emissions from product manufacturing within the EU. Free quotas are to be phased out as the CBAM fee is implemented and increased. This will impact Norwegian manufacturers and importers of goods from both EU countries and non-EU countries.

If the scheme is implemented in Norway from 1 January 2026, it means that Norwegian businesses will not have the chance of testing the scheme in the same way that importers in EU countries could from autumn 2023. Therefore, Norwegian businesses should make the necessary preparations for reporting during 2025.

The goods covered by CBAM are linked to specific tariff numbers (HS) in the customs tariff.

Example:
CO2 emissions for iron & steel products mentioned under HS code 7301 should be calculated:
Sheet piling of iron or steel, whether or not drilled, punched or made from assembled elements; welded angles, shapes and sections, of iron or steel.

It is, therefore, crucial to have a good understanding of the goods and how these goods should be classified under the customs tariff upon import to Norway. Today, this has not been crucial for many importers since most industrial goods are customs duty-free upon import to Norway. This will now change. Additionally, it is essential to be aware of where the goods are produced (country of origin) concerning emission calculations.

To make this technically more complex, there are specific, full, or partial exemption schemes available through customs procedures for temporary admission for processing of industrial goods (active processing), processing outside the customs territory (passive processing), and the re-importation of goods. Additionally, the emission calculation methodology is complex as both direct and indirect embedded emissions need to be calculated at product and installation levels.

The introduction of the CBAM fee and the phasing out of free quotas (EU/ETS) will impact Norwegian heavy industry, the structure of Norwegian fees, and the free quota system (CO2 quotas) for this sector. The government has allocated NOK 50 million in the budget for relevant agencies to commence preparations and implementation of the scheme. However, it has not yet been finally determined who will be the competent authority for the CBAM scheme in Norway, but based on experiences from EU countries, it may be appropriate to assign the Customs Authorities a central role (press release in Norwegian).

Companies importing goods to Norway affected by the CBAM scheme are advised to start mapping whether their import goods may be subject to the CBAM tax from 2026.

To determine if the goods are covered by the CBAM scheme, it is essential to verify the use of the correct customs tariff number and the actual origin of the goods. KPMG can assist companies with such mapping, facilitating the process of purchasing CBAM certificates and meeting the emission reporting requirements.

KPMG invites the business community to participate in our digital seminar on January 16, 2025, on customs in international trade, where we will, among other things, review new developments in customs regulations, reporting requirements, and the latest status on the implementation of the CBAM arrangement in Norway.