The EU is now introducing so-called climate tariffs to create a fairer level playing field and reduce greenhouse gas emissions. For importing companies, it is important to quickly get a grip on the CBAM regulations, otherwise there is a risk that imports will be stopped.
In recent years, the EU has introduced increasingly stringent rules to reduce greenhouse gas emissions. The goal is to reduce the Union’s emissions by 60 percent, and to reduce the risk that production and thus emissions will only be moved to countries with different regulations, so-called climate tariffs are now being introduced.
The regulations are called the Carbon Border Adjustment Mechanism (CBAM). The transition period began on 1st October 2023 and will continue until the end of December 2025, after which CBAM will be launched for real.
Which goods are covered?
The CBAM will initially cover the categories of iron, steel, aluminium, fertilisers, cement, electricity and hydrogen, but the EU intends to expand the number of categories after the transition period. For all these goods, the importer must produce data on the emissions generated during production, report this data to the EU and pay a fee for the emissions by purchasing emission certificates.
The idea is that this administration will be handled via a central database where importing companies register. The database will open next year, and if you do not register there, the import will be automatically denied.
In order to obtain the data needed to comply with the CBAM, importers will need to have a good dialogue with their producers.
The EU wants to get the actual emissions data, but if that is not possible, there will be country-specific default values – based on the five worst emitters in the country. This is supposed to create an incentive to produce the real figures.
What to do now?
The first quarter of the transition period is currently underway, which means that the first declaration of emissions data will take place in January 2024. So what do importing companies need to think about right now?
– Start mapping out where your production takes place and how many producers you need to contact to get access to the collected data as soon as possible. It is also important to set up internal procedures for who will handle CBAM reporting.
In Sweden, the Swedish Environmental Protection Agency will be responsible for the administration of CBAM. They can answer questions, but will also have the ability to impose sanctions on companies that do not comply with the regulations.
CBAM Brief Facts:
Stands for: Carbon Border Adjustment Mechanism
Introduction: 1st January 2026. The transition period is already underway and entails accounting requirements for companies
Objective: to create economic incentives for importers to put pressure on their producers to reduce greenhouse gas emissions. The CBAM is introduced by the EU and the money it raises will end up in an EU central fund that will promote green investments in the Union.
We would like to thank the West Sweden Chamber of Commerce for information about CBAM, including a short webinar on the subject.
More information: The European Commission and the Swedish Environmental Protection Agency