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Carbon Border Adjustment Mechanism (CBAM): EU Carbon Compliance and Roadmap for Businesses

The Carbon Border Adjustment Mechanism (CBAM) is a key part of the European Union's (EU) efforts to reduce carbon emissions and build a sustainable future. In this blog post, we will examine the timeline of CBAM in detail and discuss what businesses need to do to comply with this process.

Transitional Period

1 October 2023 – 31 December 2025

Importing companies are required to report embedded emissions. During the transitional period, verification of reports is not required. Detailed reporting formats can be accessed through this link.

Gradual Introduction of Financial Obligations

2026–2034

During this period, CBAM financial obligations will be gradually introduced, and free allocations under the EU Emissions Trading System (EU ETS) will be phased out. By 2034, the full cost of products based on their carbon content will be calculated.

Calculation of Financial Obligations: During the transitional period, the number of CBAM certificates and associated financial obligations will be calculated based on the actual emissions of the production facilities of imported goods and the free allocations under EU ETS.

Authorized CBAM Declarant and Import/Customs Procedures

During the transitional period, imports and customs procedures will be conducted by an authorized CBAM declarant, or directly by the importing company or customs representatives.

CBAM Roadmap for Businesses

Compliance with CBAM can seem complex, but it is possible to develop a successful compliance strategy. Here is a roadmap for businesses to follow during the CBAM process:

  1. Start Monitoring Emissions: Begin data collection processes to track carbon emissions.

  2. Prepare CBAM Reports: Start preparing CBAM compliance reports and optimize the reporting process.

  3. Develop a Compliance Strategy: Create a strategic plan to ensure CBAM compliance for your business.

  4. Invest and Innovate: Make investments and implement innovations to reduce carbon emissions and increase sustainability practices.

  5. Monitor CBAM Pricing: Closely track CBAM pricing and the cost of emission allowances.

  6. Sustainable Business Practices: Make your business more sustainable and encourage green practices.

CBAM represents a new era of carbon regulation for businesses. Companies have the opportunity to fulfill their environmental responsibilities while gaining long-term competitive advantages. Transitioning from the transitional period to full operational compliance marks a significant transformation, and being prepared for this phase is critical.

What is CBAM?

As the name suggests, CBAM is a regulatory mechanism designed to monitor and control carbon emissions. It is particularly used to regulate the carbon emissions of imported products. The carbon footprint of imported products is assessed and regulated in the importing country.

CBAM’s Role in Combating Climate Change

CBAM plays a critical role in addressing climate change. Regulating carbon emissions is essential to control greenhouse gas release into the atmosphere and reduce the effects of global warming. CBAM helps businesses and countries meet their carbon reduction commitments.

The EU’s Goal to Prevent Carbon Leakage

When the EU tightens environmental regulations, some businesses may relocate to countries with less stringent regulations. This is called carbon leakage. CBAM prevents such leakage by regulating the carbon emissions of imported goods, ensuring a level playing field for businesses within the EU.

CBAM’s Impact on Businesses and Imports

CBAM has direct effects on businesses and importers. Companies must commit to reducing the carbon footprint of their products and ensuring CBAM compliance. Importers must monitor the carbon emissions of imported products and ensure that these products comply with CBAM regulations.

Why CBAM is Important

CBAM is considered a key tool in fighting climate change. It encourages businesses to adopt more sustainable production processes and reduces negative environmental impacts. CBAM also helps maintain a fair competitive environment. Implementing CBAM supports the EU’s environmental goals and represents a significant step in the global fight against climate change.

The importance of CBAM continues to grow, and businesses’ commitment to compliance is a crucial step toward a sustainable future.

CBAM’s Objectives

CBAM aims to promote environmental sustainability while giving EU companies and businesses in other countries the opportunity to consider environmental impacts in their operations. By taking these steps toward a greener and more sustainable future, trade aligns with climate goals.

At Carbon Gate, we have developed software capable of automating all CBAM-related processes in Turkish. Our platform makes preparing CBAM declarations fast and easy.

With our new digital platform, you can quickly start the compliance process by pre-registering your company and preparing it for sustainability.

For more information, you can contact us at cbam@carbongate.io.

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