The EU decided to introduce a Carbon Border Adjustment Mechanism (CBAM) to combat what has been called carbon leakage whereby companies based in the Member States could move carbon-intensive production abroad to take advantage of laxer standards, or EU products could be replaced by more carbon-intensive imports.
The European Commission has accepted that many companies may still be unsure about the intricacies of the new system and has produced an updated guidance which answers 125 questions on CBAM.
The guidance is available HERE, and the questions range from “What is the current stage of implementation of CBAM?” to “Should the gross weight or the net weight of the imported CBAM goods to be used for the calculation of the embedded emissions?”.
The questions go into considerable details such as whether, when calculating the embedded emission of steel products, auxiliary processes such as lime kilns or coke oven plants are included in the boundary calculation and whether the gross weight or the net weight of the imported CBAM goods should be used for the calculation of the embedded emissions.
The current document mainly focuses on the transitional phase of the CBAM, which entered into force on 1 October 2023. However, several questions concerning the definitive period (starting in January 2026) are also addressed.
The Commission has made available detailed guidance regarding the application of CBAM during the transitional period. This can be found HERE.
The gradual introduction of CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry.
