The Carbon Border Adjustment Mechanism (CBAM) is meticulously crafted to align with the EU’s international commitments, including adherence to World Trade Organization (WTO) rules. Operating akin to the EU Emissions Trading System (ETS), the CBAM functions as follows:
- CBAM assesses the actual embedded emissions within goods imported into the EU, utilizing a methodology consistent with emissions reporting under the EU ETS for similar goods produced within the EU.
- Starting from the definitive period of CBAM in 2026, EU importers will purchase CBAM certificates equivalent to the carbon price applicable if the goods were manufactured under the EU’s carbon pricing regulations.
- Conversely, if non-EU producers have already paid a carbon price in a third country for the embedded emissions of the imported goods, this expense can be entirely offset from the CBAM obligation.
By mitigating the risk of carbon leakage, CBAM encourages producers outside the EU to transition to greener production processes and prompts countries to implement carbon pricing mechanisms. The gradual introduction of CBAM, initially focusing on select goods in high-risk sectors like iron/steel, cement, fertilizers, aluminium, hydrogen, and electricity, aims to provide legal certainty and stability. During the transitional period, which commenced on 1 October 2023, a reporting system facilitates a smooth implementation, fostering dialogue with third countries. Importers are scheduled to commence CBAM financial adjustments in 2026.
Dubrink simplifies CBAM compliance by providing a user-friendly platform for importers. With our software, businesses can efficiently navigate the reporting requirements, ensuring smooth integration with CBAM regulations and fostering productive dialogue with stakeholders.