Carbon Border Adjustment Mechanism (CBAM) Questions and Answers

Elbette, sunduğunuz metnin İngilizce çevirisi aşağıdadır.

General

Please note that this FAQ document focuses on the Carbon Border Adjustment Mechanism (CBAM) transitional period, which entered into force on 1 October 2023. However, some questions dealing with the definitive period (starting from January 2026) are also answered.

Why is the European Union (EU) establishing a Carbon Border Adjustment Mechanism (CBAM)?

The EU is a frontrunner in international efforts to combat climate change. The European Green Deal clearly set the ambition of achieving a 55% net reduction in greenhouse gas emissions by 2030 compared to 1990 levels and climate neutrality by 2050. In July 2021, the Commission put forward its Fit for 55 policy proposals to turn this ambition into reality, further cementing the EU as a global climate leader. Since then, those policies have taken shape through negotiations with the co-legislators, the European Parliament and the Council, and many have now been signed into EU law. This includes the EU’s Carbon Border Adjustment Mechanism (CBAM) to prevent climate action from being undermined.

What is the current stage of implementation of the CBAM?

The European Parliament and the Council of the European Union, as co-legislators, signed the CBAM Regulation (EU) 2023/956 on 10 May 2023. The CBAM entered into application in its transitional period on 1 October 2023, with the first quarterly reports due by 31 January 2024. The set of rules and requirements for the reporting of emissions under CBAM are further specified in the Implementing Regulation (EU) 2023/1773, which sets out the reporting rules during the transitional period. The Commission has established the CBAM transitional registry, is preparing additional secondary legislation and carrying out planned analyses. The CBAM definitive period will enter into force in January 2026. The European Commission has provided detailed guidance for the implementation of the CBAM during the transitional period. This guidance includes detailed manuals, webinars, e-learning materials, and other resources. Access to all supporting information is available on the Commission's CBAM webpage.

How does the CBAM work?

The CBAM is designed to comply with the EU’s international commitments and obligations, including World Trade Organisation (WTO) rules. The CBAM system mirrors the EU ETS, working as follows:

• The CBAM applies to the actual value of embedded emissions in products imported into the EU, determined by a method consistent with the reporting of emissions under the EU ETS for the production of similar goods in the EU.

• Starting from the entry into force of the definitive CBAM period in 2026, EU importers will purchase CBAM certificates corresponding to the carbon price that would have been paid if the goods had been produced under the EU’s carbon pricing rules.

• Conversely, if a non-EU producer has already paid a carbon price in a third country for the embedded emissions in the imported goods, the corresponding cost can be fully deducted from the CBAM obligation.

CBAM will therefore help mitigate the risk of carbon leakage and incentivise both the greening of production processes in non-EU countries and encourage countries to introduce carbon pricing measures. In order to provide legal certainty and stability to businesses and other countries, the CBAM is being introduced gradually and initially applies only to a limited number of products in sectors with the highest risk of carbon leakage: iron/steel, cement, fertilisers, aluminium, hydrogen, and electricity generation. During the transitional period, which started on 1 October 2023, a reporting system for these goods is in place, the aim of which is to ensure a smooth transition and facilitate dialogue with third countries. Importers will start paying the CBAM financial adjustment in 2026.

How does the CBAM interact with the EU Emissions Trading System (ETS)?

The EU Emissions Trading System (ETS) is the world’s first international emissions trading system and the EU's flagship policy for combating climate change. It sets a limit on the amount of greenhouse gas emissions that can be emitted from power generation and large industrial installations. Allowances must be acquired on the emission trading market, although a certain number of free allowances are allocated to industry to prevent carbon leakage. To increase the incentive to reduce carbon intensity, the CBAM will be phased in as free allowances are phased out. The number of free allowances decreases over time for all sectors under the EU ETS. For CBAM sectors, the reduction accelerates from 2026, so that the ETS can have the greatest possible impact in meeting the EU’s ambitious climate targets. At the same time, the CBAM financial adjustment is phased in according to a gradual timeline. The CBAM will be based on a system of certificates corresponding to the embedded emissions in CBAM goods imported into the EU. The CBAM departs from the ETS in some limited areas where needed, as it is not a 'cap-and-trade' system. For example, an unlimited number of certificates may be purchased, in contrast to the EU ETS. The price of the CBAM certificates, however, will reflect the ETS allowance price. When the full CBAM regime becomes operational in 2026, the system will align with the revised EU ETS, notably concerning the reduction of free allowances in the sectors covered by the CBAM. This means that CBAM will only start to apply to the covered products and in proportion to the reduction of free allowances allocated to those sectors under the EU ETS. Simply put, until free allowances in the CBAM sectors are fully phased out in 2034, the CBAM will only apply to the proportion of emissions not benefiting from free allowances under the EU ETS, ensuring that importers are treated fairly compared to EU producers.

How does the CBAM work with other ETS systems outside the EU?

The CBAM will ensure that imported products receive "no less favourable treatment" than EU products, thanks notably to three design features of the CBAM:

• The CBAM takes into account the 'actual values' of embedded emissions, meaning that the decarbonisation efforts of companies exporting to the EU will lead to a lower CBAM payment;

• The price of CBAM certificates to be purchased for the import of CBAM goods will be the same as the price applicable to EU producers under the EU Emissions Trading System (EU ETS); and

• Effective carbon prices paid outside the EU will be deducted to avoid double pricing without adjustment.

This carbon price paid in a third country could be, for example, through an emissions trading system. The Commission will adopt secondary legislation to design the rules and processes for taking into account the effective carbon price paid abroad before the end of the transitional period. During the transitional period, the reports should, for information purposes, include the carbon price paid in the country of origin for the embedded emissions in the imported goods, taking into account any rebate or other form of compensation.

Which sectors does the new mechanism cover and why were these sectors chosen?

The CBAM initially applies to the import of the following goods:

• Cement

• Iron and Steel

• Aluminium

• Fertilisers

• Hydrogen

• Electricity

These sectors were chosen according to specific criteria, notably because they are at the highest risk of carbon leakage and are highly emission-intensive, and will, once fully implemented, represent more than 50% of the emissions of the industrial sectors covered by the EU ETS. In the future, the CBAM may be extended to other ETS sectors.

To which products does the CBAM Regulation apply?

The CBAM Regulation applies to CN codes (Combined Nomenclature), which adds two digits to the HS code and is used as a product code for exports outside the EU. All goods for which embedded emissions must be reported are listed in Annex I of the CBAM Regulation. These are called 'CBAM goods'. Sectors such as 'iron and steel' are mentioned for information purposes only. For example, this means that the import of ammonia (CN code 2814 under the fertiliser sector) falls within the scope of the CBAM Regulation even if it is not intended for the production of fertilisers.

Does CBAM apply to 'second-hand' products?

The CBAM Regulation applies to all goods imported into the EU, i.e., placed in free circulation on the EU single market.

Does CBAM apply to 'returned goods'?

Returned goods are goods placed in free circulation that benefit from a relief from customs duty because they were previously EU goods, either because they originate in the EU or because they were previously placed in free circulation and they fulfil certain conditions (e.g., if they are placed in free circulation within three years after being previously exported). The CBAM applies only to the import of goods originating in third countries. Therefore, if the goods are of EU origin, the CBAM does not apply to them.

Does CBAM apply to the EU's outermost regions, such as Mayotte or La Réunion, and thus to the overseas territories?

The CBAM Regulation applies only to CBAM goods originating in third countries and imported into the customs territory of the Union. The list of territories constituting the customs territory of the EU is contained in Article 4 of the Union Customs Code (Regulation EU 952/2013). La Réunion and Mayotte are part of the EU customs territory, and THEREFORE, the CBAM Regulation does not apply to goods produced in La Réunion and Mayotte.

Which third countries are covered by the CBAM?

As a matter of principle, products from all non-EU countries are covered by the CBAM. However, some third countries that participate in the EU ETS or have an emissions trading system linked to it are excluded from the CBAM, so that a carbon price is not paid twice for the same product. This is the case for members of the European Economic Area (EEA) and Switzerland. The CBAM applies to electricity generated in third countries and imported into the EU, including those countries seeking to integrate their electricity markets with the EU. Once these electricity markets are fully integrated and specific strict obligations and commitments are implemented, the countries concerned can be exempted from the CBAM. In this case, the EU will review the exemptions in 2030, by which time these partners should have implemented their committed decarbonisation measures and established an emissions trading system equivalent to that of the EU.

Do I need to report the import of CBAM goods originating in the United Kingdom?

The embedded emissions in goods originating in the UK will need to be reported during the transitional period.

What happens during the transitional period?

During the transitional period, which started on 1 October 2023 and ends at the end of 2025, the reporting declarant (which can be the importer or an indirect customs representative) must report the embedded emissions in the imported CBAM goods every quarter, but without any financial adjustment to be paid on the product, allowing time for the final system to be put in place. Reporting declarants should contact the national competent authority in the country where they are established to access the CBAM Transitional Registry, which will be used to submit the CBAM quarterly reports. The first CBAM quarterly report must be submitted by 31 January 2024 and covers the reporting period from 1 October 2023 to 31 December 2023.

Are there penalties for not complying with the CBAM Regulation?

Yes. Reporting the embedded emissions in CBAM goods is mandatory from 1 October 2023. Reporting declarants may be subject to penalties ranging between EUR 10 and EUR 50 per tonne of unreported emissions. Penalties apply in cases where a) the reporting declarant has not taken the necessary steps to comply with the obligation to submit a CBAM report, or b) the CBAM report is incorrect or incomplete, and the reporting declarant has not taken the necessary steps to correct the CBAM report after the competent authority has initiated the correction procedure.

Where can I find detailed information on how to report embedded emissions?

All the information required to carry out the reporting is set out in the Implementing Regulation (EU) 2023/1773, which sets out the reporting rules for the transitional period. Commission services have published (and will periodically update) a guidance document for importers and one for third-country producers (one for importers of CBAM goods and one for producers of third countries) and an optional communication template to facilitate the exchange of information between producers and importers. You can find these documents on the CBAM website: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en. The guidance document for EU importers will be available in 24 official EU languages. The Guidance document for third-country producers will be available in English, French, German, Polish, Spanish, Italian, Arabic, Korean, Mandarin, Hindi, Turkish.

Is it mandatory to use the communication template Excel file?

No, the use of the communication template is not mandatory, but it is recommended. The communication template allows businesses to determine the embedded emissions in CBAM goods according to the methodology set out in the Implementing Regulation (EU) 2023/1773. The template takes into account all relevant input material flows and emission sources, electricity consumption and relevant precursors for the calculation. The template includes a worksheet called 'Summary_Communication' which contains all the information needed by the reporting declarant. This worksheet thus facilitates communication between third-country producers and importers (or their representatives).

Who is responsible in cases of incorrect or insufficient information being submitted?

The responsibility lies with the reporting declarant. This can be the importer or the indirect customs representative. The national competent authority has the responsibility to establish a proper dialogue with the reporting declarant and to apply penalties.

Who can I contact if I have further, more specific questions?

The relevant national competent authorities and ultimately the Commission are at your service to resolve any doubts you may have regarding the implementation of the CBAM.

The list of national competent authorities is published and continuously updated on the Commission’s dedicated CBAM website: Carbon Border Adjustment Mechanism (europa.eu).

Reporting: General Issues

Who is responsible for reporting?

Customs authorities will inform the persons who lodge a customs declaration of the obligation to report information during the transitional period. The reporting declarant will be the importer or the indirect customs representative, depending on who lodges the customs declaration. Customs authorities have the freedom to choose how they communicate the reporting obligations.

The person responsible for the reporting obligations can be:

• The importer, if (i) the importer lodges the customs declaration for release for free circulation of the goods in their own name and on their own behalf; and (ii) the importer is also the person who is lodging the customs declaration and declares the import of the goods.

• The indirect customs representative, in the event that the customs declaration is lodged by an indirect customs representative appointed in accordance with Article 18 of Regulation (EU) No 952/2013: if the importer is established outside the European Union; or if the indirect customs representative has agreed to take on the reporting obligations according to Article 32 of Regulation (EU) 2023/956, and the importer is established within the European Union. The appointed indirect customs representative must be established within the European Union and must fulfil the conditions for customs representatives determined by the respective Member State (see Article 18 of Regulation (EU) No 952/2013).

Is it possible for an importer to have more than one indirect customs representative?

The importer is free to use different indirect customs representatives, each of whom is responsible for the specific CBAM goods that they include in the customs declaration. Each representative will indicate their own EORI number at customs, which is the proof of who is responsible for the embedded emissions. It is therefore not possible to double-count embedded emissions.

Will companies be allowed to report at a centralised level when their subsidiaries in different Member States have different Economic Operator Registration and Identification (EORI) numbers?

In principle, CBAM goods are attributed to a CBAM declarant, the reporting declarant, through the EORI number presented to the customs authorities. This means that, by default, CBAM reports for different subsidiaries (with different EORI numbers) will be done separately.

However, since importers are allowed to appoint an indirect customs representative to take on the CBAM obligations, a single indirect customs representative can be appointed and report at a centralised level, representing all subsidiaries.

What are the reporting obligations? When do I have to submit the report?

During the CBAM transitional period, from 1 October 2023 to 31 December 2025, the importer must submit a CBAM report every quarter. This report must contain information on the goods imported during the previous quarter and must be submitted no later than one month after the end of that quarter. The reporting timeline during the transitional period is set out below:

Reporting Period	Submission Deadline
2023: October-December	2024: 31 January
2024: January - March	2024: 30 April
2024: April - June	2024: 31 July
2024: July - September	2024: 31 October
2024: October - December	2025: 31 January
2025: January - March	2025: 30 April
2025: April - June	2025: 31 July
2025: July - September	2025: 31 October
2025: October - December	2026: 31 January

The report must contain the information specified in Article 35 of the Regulation:

• The total quantity of each type of CBAM good;

• The total of actual embedded emissions;

• The total indirect emissions;

• The carbon price paid in the country of origin (including the relevant precursors, where applicable) for the embedded emissions of the imported goods, taking into account any rebate or other form of compensation.

I import very small quantities of CBAM goods. Are these products covered by the CBAM Regulation?

Small quantities of imported CBAM-covered goods can be automatically exempted from the CBAM Regulation provided that the de minimis exemption applies. The de minimis exemption means that consignments are exempted from the CBAM Regulation if the total intrinsic value of the CBAM goods does not exceed EUR 150. Therefore, the overall value of the total CBAM goods within a consignment must be considered, and if that value is above EUR 150, the de minimis exemption does not apply. To illustrate, consider the following two situations:

• Situation 1: My consignment contains X number of non-CBAM goods, each with a nominal value of EUR Y. These are not relevant for the application of the de minimis exemption. I also carry a package of Portland cement, identified by CN code 2523 21 00, whose value does not exceed EUR 150. The de minimis exemption applies.

• Situation 2: My consignment contains X number of non-CBAM goods, each with a nominal value of EUR Y. These are not relevant for the application of the de minimis exemption. I also carry one tonne of Portland cement (CN code 2523 21 00) and one tonne of Other Portland cement (CN code 2523 29 00). The value of each CBAM good is EUR 120. The total value of the CBAM goods in my consignment is above EUR 150, and therefore the de minimis exemption does not apply.

I did not import CBAM goods within a certain reporting quarter. Do I have to submit a CBAM report?

If you have not imported (i.e., released for free circulation) any CBAM goods within a certain quarter, you do not need to submit any CBAM report for that specific quarter.

Reporting: Responsibilities and Procedures

What is the role of the European Commission during the transitional period?

The Commission will have the following tasks during the transitional period:

• Managing the CBAM Transitional Registry.

• Transmitting a list of reports where the reporting obligation has not been fulfilled to the national competent authorities.

• Monitoring the implementation, progress, and risks of circumvention of the CBAM, as well as analysing the impact of the CBAM on exports, downstream products, trade flows, and least developed countries (LDCs).

• Preparing secondary regulations in the form of implementing acts:

  • Mid-2023 on the transitional period (Article 35), reporting obligations, and reporting infrastructure.

  • Mid-2024 on the authorisation of declarants (Articles 5 and 17) and the CBAM registry (Article 14).

  • Mid-2025 on implementing acts on indirect emissions (Annex 4), verification (Article 8), verifier accreditation (Article 18), paid carbon price (Article 9), customs information (Article 25), continental shelf (Article 2), average ETS price (Article 21), CBAM declaration (Article 6), methodology (Article 7), and free allocation (Article 31).

• Preparing secondary regulations in the form of delegated acts to prepare for the secondary regulations on accreditation (Article 18) and the sale and repurchase of certificates (Article 20) by mid-2025. If necessary, the Commission will also prepare regulations in the form of delegated acts on exempted countries, electricity rules, and anti-circumvention rules.

• Establishing the Common Central Platform where the sale and repurchase of certificates will take place during the definitive period.

What is the National Competent Authority (NCA)?

Each Member State has designated a national competent authority (NCA) to carry out the tasks defined in Regulation (EU) 2023/956. In short, NCAs are responsible for checking the quality of the CBAM quarterly report (with the support of the Commission) and are responsible for liaising with declarants who have not fulfilled their reporting obligation. NCAs are ultimately responsible for ensuring compliance with the CBAM rules and can impose penalties. Finally, from 2025, they grant the status of "authorised CBAM declarant" for the definitive period.

The list of national competent authorities is published and continuously updated on the Commission’s dedicated CBAM website: Carbon Border Adjustment Mechanism (europa.eu).

Do importers of CBAM goods need to be 'authorised' to import these goods into the EU during the transitional period?

Importers of CBAM goods do not need to be authorised during the transitional period to import these goods into the EU. Customs will inform importers of CBAM goods about their reporting obligations at the moment of import.

Are there verification obligations during the transitional period?

No, the obligation for verification by an external independent organisation will only be mandatory from 2026 onwards. Secondary regulations for the definitive period will define the rules for the verification of emissions based on the data collected from EU importers during the transitional period.

What are the original documents in the quarterly CBAM report?

No original documents need to be submitted. The reporting declarant only has to submit the information required for the quarterly CBAM report via the CBAM Transitional Registry.1

According to the principle of transparency outlined in Annex III section A.2 of the Implementing Regulation, complete and transparent records shall be kept at the installation of all data relevant for dete2rmining the embedded emissions of the goods produced, including necessary supporting documents, for at least 4 years after the reporting period. Those records may be disclosed to the reporting declarant. Such records may be requested by the EU Member States in case of an inquiry into the quarterly CBAM report.

I am both an importer and an indirect customs representative filling out CBAM reports on behalf of another importer. Will I submit one single CBAM report or two separate CBAM reports?

A reporting declarant can act both as an importer (Company A, importing steel) and as an indirect customs representative (for Company B, importing aluminium). In this case, the reporting declarant must still submit a single quarterly CBAM report, which includes all CBAM goods for which they lodge a customs declaration.

What is the carbon price that I report as the effective 'carbon price'?

As defined in the CBAM Regulation, the carbon price refers to a monetary amount paid in a third country, under a carbon emission reduction regime, calculated based on the greenhouse gases released during the production of the goods, and can take different forms, such as a tax, levy, fee, or emission allowances under a greenhouse gas emission trading system.

During the transitional period, reporting declarants must report the effective carbon price paid in the jurisdiction where the CBAM good was produced. In the definitive period, the disclosure of this information will provide a deduction for importers to avoid the double pricing of embedded emissions.

Who will check the accuracy of the data and reports submitted?

During the transitional period, and in accordance with Article 11 of the Implementing Regulation, the Commission will perform a first screening of the CBAM reports and transmit the list of missing or suspicious reports (i.e., reports where the Commission believes there is non-compliance with the CBAM Regulation) to the national competent authority. The national competent authority then decides whether to launch a review and potentially initiate a correction procedure, which may ultimately lead to penalties.

Is it possible to correct a previously submitted CBAM report?

Article 9 of the Implementing Regulation foresees that a CBAM report already submitted can still be corrected for a period of two months after the end of the reporting quarter. For the first two quarterly reports, the Implementing Regulation foresees a longer period for corrections, making corrections possible up to 31 July 2024. This allows for the reports due by 31 January and 30 April to be subsequently corrected until 31 July 2024.

Does the report have to be in English only, or is it possible to report in other languages?

Reporting is possible in all 24 EU languages.

Reporting: The CBAM Transitional Registry

What is the CBAM Transitional Registry?

In order to ensure the effective implementation of the reporting obligations, the Commission has developed an electronic database that will collect the information reported during the transitional period. The CBAM Transitional Registry is a standardised and secure electronic database containing common data elements for reporting during the transitional period and ensures accessibility, file handling, and confidentiality. The CBAM Transitional Registry forms the basis for the development and establishment of the CBAM Registry in accordance with Article 14 of Regulation (EU) 2023/956. Importers can connect to the CBAM Transitional Registry via this link: https://customs.ec.europa.eu/taxud/uumds/cas

What will the CBAM Transitional Registry be used for?

The CBAM Transitional Registry will enable communication between the Commission, the competent authorities, the customs authorities of the Member States, and the reporting declarants. The CBAM Transitional Registry will be used to serve the purposes of collecting and analysing information, and therefore will not be used for enforcement purposes.

Is the CBAM Transitional Registry the same as the EU Customs Trader Portal?

The CBAM Transitional Registry operates independently of the EU Customs Trader Portal (EUCTP) for reporting declarants. However, existing importers may use their existing user accounts if they will also act as CBAM Declarants and if the EU Member State allows it. Depending on the Member State, a specific access request to the CBAM module may be required.

Will the data shared in the CBAM Transitional Registry be confidential?

According to Article 14 of the CBAM Regulation, the information contained in the CBAM registry shall be "confidential", except for "the names, addresses, and contact details of the undertakings and the location of the installations in third countries". Article 13 of the CBAM Regulation and Article 15 of the Implementing Regulation setting out the reporting obligations for the transitional period include an obligation of professional secrecy regarding information obtained by the national competent authority. Some information that can be requested from the importer is necessary to verify the level of emissions, especially when it is not verified by external and independent verifiers. However, it is important to note that there is optional sensitive information that operators and importers can exchange. For instance, in Annex IV of the Implementing Regulation, there is information about the "communication from the installation operators to the reporting declarants," but only the information in Annex I must be provided. The CBAM Transitional Registry specifies the mandatory and optional entries. In the optional Excel template that businesses and importers can use to exchange information during the transitional period, the installation operators have the possibility to choose whether or not they want to share the detailed information (optional). There is a degree of flexibility not to share data that operators may consider sensitive. Based on this experience, the Commission will also focus on the information that must be disclosed in the reports and by the external verifiers in the definitive regime. For the definitive period, the Commission is assessing options for producers to send information directly via the Registry without the reporting declarants seeing certain information.

How can I register as a reporting declarant and gain access to the CBAM Transitional Registry?

When economic operators intend to be a reporting declarant for CBAM purposes, they should apply to the national competent authority (NCA) of their respective Member State. A provisional list of the competent authorities is published and continuously updated on the Commission’s dedicated CBAM webpage: Carbon Border Adjustment Mechanism (europa.eu). The NCA in each Member State is also responsible for providing reporting declarants with access to the CBAM Transitional Registry. In some cases, a new CBAM-specific account and new login credentials may be required. In other cases, existing accounts for accessing customs systems may be used. In the case of Spain, for instance, access to the CBAM Transitional Registry is only possible through the customs domain. Please contact your NCA for further details regarding your login credentials.

How many CBAM Transitional Registry environments are available?

There are a production and a conformance CBAM registry environment available for CBAM reporting declarants. The conformance environment can be used as a testing environment to familiarise oneself with the CBAM quarterly report form and the CBAM Registry user interface. A separate registration is needed for each environment (the same email can be used) for security reasons. For both environments, the respective NCA provides the access details to the reporting declarants. Link to the production CBAM Transitional Registry: https://CBAM.ec.europa.eu/declarant Link to the conformance CBAM Transitional Registry: https://conformance.CBAM.ec.europa.eu/declarant

Who is authorised to register a company as a CBAM Declarant?

Any natural person who can prove that they represent the company can apply to the national competent authorities (NCAs) of the Member State where the company is established and request access to the CBAM Registry as a CBAM Declarant. The NCA is responsible for verifying the legitimacy of the requests and granting the CBAM Declarant access permissions. The owner of the account to whom the CBAM Declarant access is granted by the NCA is responsible for keeping the account confidential and granting access to additional accounts of the company (employees).

Can companies not directly subject to the CBAM also access the CBAM Transitional Registry?

No, access to the CBAM Transitional Registry is restricted to the reporting declarants, the competent authorities in the Member States, the customs authorities, and the European Commission.

How should the data in the CBAM Transitional Registry be filled in?

Quarterly reports must be filled in per importer, per CN code, and per installation. There are two ways to fill in the data in the CBAM Transitional Registry:

• Reporting declarants can manually fill in the data within the CBAM Transitional Registry interface.

• Alternatively, reporting declarants can use an XML structure to upload their CBAM quarterly report. Once an XML file is successfully uploaded, a new draft quarterly report is created and can be submitted via the CBAM Registry user interface. A supporting XLS file that can be used to fill in the quarterly report using XML will be published soon on the Commission’s CBAM website.

There are mandatory and optional fields. Mandatory fields are marked with an asterisk (*) in the CBAM Transitional Registry. The mandatory fields are also specified in the supporting XLS file. Detailed information on how to fill in the report and how to use the XSD file can be found in the CBAM Transitional Registry user manual for Declarants. A draft report can be saved even if all mandatory elements are not provided. However, to submit the report, all mandatory elements must be provided.

What is the methodology for calculating embedded emissions in CBAM goods during the CBAM Transitional Period? What is the relevant time interval for calculating embedded emissions? Can data from previous years be used?

The default reporting period, i.e., the reference period for operators to determine embedded emissions, is a calendar year. However, the use of other periods (e.g., year of the product) that ensures comparable coverage and encompasses at least 3 months can be justified. More details can be found under Section 4.3.4 (for EU importers) / 4.3.3 (for non-EU installations) of the Guidance documents. For the CBAM report to be delivered in the first quarter of the year, data from the previous year should be used. In cases where such data is not yet available by the end of January/February, data from the year before can be used.

What are simple and complex goods?

There are two types of CBAM goods: simple and complex ones. "Simple goods" are produced from input precursors whose embedded emission is considered zero according to the CBAM reporting methodology. Therefore, the embedded emissions of simple CBAM goods are based only on the emissions that occur during their production. For "complex goods," it is also necessary to include the embedded emissions of the relevant precursors used in the production process. Relevant precursors refer to raw materials used in the production of complex CBAM goods that are themselves CBAM goods. In the cement sector, an example of a precursor is cement clinker, which is the main constituent of Portland cement.

What are direct and indirect emissions?

Direct emissions cover the emissions that occur during the production processes of the CBAM goods, as well as the production of heating and cooling, and wherever the production of heating and cooling takes place, the relevant emissions are counted as direct emissions. Indirect emissions cover the production of the electricity consumed during the production of the CBAM goods. The embedded direct and indirect emissions of the relevant precursors are also taken into account when determining the embedded direct and indirect emissions of the CBAM goods. For monitoring purposes during the transitional period, importers are required to report both direct and indirect emissions for all products covered by the CBAM. In the definitive period, starting on 1 January 2026, the scope of CBAM will be limited to direct emissions for iron/steel, aluminium, and hydrogen, while importers of cement and fertilisers will have to report both direct and indirect emissions.

What is the "bubble approach" and how does it work?

If an installation produces a complex good and also produces its precursor, and this precursor is exclusively used to produce the complex good, a combined (single) production process system boundary can be defined within the installation (see guidance documents for explanations).

If an imported CBAM good was produced using precursors (e.g., pig iron) produced in the EU, should this be taken into account in the calculation?

Yes, relevant precursors produced in the EU should also be taken into account when determining embedded emissions. However, if a precursor originates from EU production, the carbon price already paid in the EU can also be reflected in the CBAM report. (More information in Section 6.10 of the Guidance for non-EU installations on Carbon Trading).

Will the European Commission formally or informally certify the "equivalence" of alternative methods?

The transitional period is a learning period for everyone, including the EU Commission services and the national competent authorities. If alternative methods do not meet the standards set in Article 4(2) of the Implementing Regulation, especially after 31 July 2024, such a calculation method may be rejected. The national competent authority will initiate communication with the reporting declarant to obtain more precise data.

How are indirect emissions in the production of CBAM goods determined?

Indirect emissions are determined by multiplying the electricity consumed to produce a CBAM good by a relevant emission factor. The emission factor can be grid-based or represent an actual emission factor.

Which emission factors for electricity should be used to determine indirect emissions?

The default emission factors for electricity for the transitional period are based on International Energy Agency (IEA) data, covering a 5-year average. They are provided by the Commission by country in the CBAM Transitional Registry. Alternatively, any emission factor of the country of origin's electricity grid may be used, provided that its basis is publicly available data. Both a zero-emission factor and a CO2-emission factor for electricity may be used. Actual electricity emission factors can be used when there is a direct technical link between the source of electricity production and the installation producing the CBAM good, or a power purchase agreement between the electricity producer and the consumer.

Can market-based certificates (Guarantees of Origin, Renewable Energy Certificates, etc.) be used to justify the use of actual emission factors?

During the transitional period, the general rule for the emission factor for electricity is to use the default values to be provided by the Commission. However, when the relevant conditions are met (i.e., existence of a direct technical link or a power purchase agreement, as explained above), actual electricity emission factors may be used. Specific market-based emission factors, such as those determined by Guarantees of Origin or Green Certificates, cannot be used to justify the use of actual emission factors. More information can be found in Annex III, section D.2 of the CBAM Implementing Regulation and section 6.7.3.2. of the guidance document for non-EU installations.

Should emissions from on-site transport at the installation be included in the calculation?

Emissions from transport using conveyor belts, pipes, and other fixed equipment are included. Emissions resulting from the use of mobile machinery (trucks, forklifts, etc.) are excluded. These rules are the same as those in the EU Emissions Trading System.

Can Carbon Capture and Utilisation (CCU) / Carbon Capture and Storage (CCS) be used to offset emissions for the purpose of determining embedded emissions?

Carbon Capture and Utilisation/Storage (CCUS) are increasingly available techniques on the market to reduce carbon dioxide emissions. Such emission reductions may be taken into account when determining embedded emissions, provided that specific criteria are met. These conditions are set out in Section B.8.2 of Annex III to the Implementing Regulation (section 6.5.6.2 of the guidance document offers further explanation). The conditions essentially include cases where the captured carbon dioxide is used in the production of products where it is chemically bound permanently, or where the captured carbon dioxide is transferred to a long-term geological storage site.

My supplier is not sending the necessary information before the report submission deadline. What should I do?

Good cooperation between third-country producers and reporting declarants is very important. The Commission has published guidance and templates to help producers determine the embedded emissions of the goods they produce. Ultimately, the reporting declarant is the person responsible for ensuring that the CBAM reports are complete and correct. The reporting declarant is liable when the CBAM reporting obligations are not respected and may be subject to penalties. During a part of the transitional period (until mid-2024), declarants may use other methods, including default values provided and published by the Commission, for every import of goods for which they do not possess all the information. The use of default values for reporting purposes during the transitional period is possible for the first three reporting periods without any quantitative limitation. Furthermore, estimated values (which include default values) may be used throughout the reporting period for processes or sub-processes that contribute a relatively small amount to the total embedded emissions of input materials or complex goods (e.g., <20%). In other words, this means that up to 100% of total embedded emissions can be determined using default values until 31 July 2024. During the remaining transitional period (i.e., 1 July 2024 – 31 December 2025), estimated values may be used, but a quantitative limitation applies: for complex goods, up to 20% of the total embedded emissions can be estimated when considering the entire production chain (default values provided by the Commission are considered "estimated"). At the end of 2025, the Commission will evaluate the default values based on the data collected. Only general default values (per CN code covered by CBAM) will be available during the transitional period. In the definitive period, default values will be provided by country or even region.

How do you determine the default values, and when will they be published?

The EU's Joint Research Centre (JRC) published estimated values of greenhouse gas emission intensities for products coming from the four energy-intensive industries (iron and steel, fertilisers, aluminium, and cement) in the EU’s main trading partners on 29 September. This study provides scientific support for the implementation of the mechanism, as foreseen by the CBAM Regulation. The JRC report presents the values in detail, depending on the production of the listed goods as part of the production of carbon dioxide, nitrogen dioxide (for some fertiliser products), and perfluorocarbons (for aluminium products). The estimated values of greenhouse gas emission intensities (i.e., specific embedded emissions) are used as an input to inform the determination of the default values for the transitional period, and these values will be published by the end of 2023.

For how long will EU importers be allowed to use alternative monitoring and reporting methods?

Some flexibilities are provided for the transitional period under the Implementing Regulation: until 31 December 2024, reporting declarants may use (a) a carbon pricing scheme, (b) a compulsory emission monitoring scheme, or (c) an installation-specific emission monitoring scheme that provides similar coverage and accuracy (Article 4(2)). Until 31 July 2024, other reference methods, including default values (see Article 4(3) of the Implementing Regulation), may be used in cases where the reporting declarant does not possess all the necessary information. Reporting declarants can therefore decide to put in place additional methods of their choosing until this date. These methods will then be evaluated by the Commission services to adjust the CBAM reporting methodology for the Definitive period.

How should emissions from the use of biomass be accounted for?

The CBAM methodology follows the same rules as the EU ETS. If biomass is used as a process input (e.g., as a reducing agent in a blast furnace instead of coal, or for electrode production), emissions from the use of biomass are not accounted for ('zero rating'). If biomass (solid, liquid, or gaseous) is used as a fuel for energy purposes, the emissions are accounted for unless the biomass meets the relevant sustainability and greenhouse gas savings criteria of the Bioenergy Directive (EU) 2018/2001. The applicable criteria depend on the type of biomass used. Annex D of the guidance document for installation operators outside the EU provides further detail.

How should decimal places and rounding be handled in the calculations?

All "significant" figures (consistent with measurement uncertainty) must be preserved throughout the calculation.

Should gross weight or net weight be used in the calculation of imported CBAM goods?

CBAM-covered goods are measured by net weight when imported into the customs territory of the Union. Therefore, net weight must also be used in the calculation of embedded emissions of CBAM goods.

How should stock items without emissions data be handled?

The embedded emissions of such stock items can be estimated using the default values published by the European Commission until 31 July 2024. Thereafter, actual data must be reported. In case of lack of data for old spare parts or stock items, data for similar or identical products may be submitted after 31 July 2024.

If an installation is used simultaneously by more than one production process, how do we attribute the emissions originating from this installation to each production process?

All inputs, outputs, and associated emissions at an installation must be attributed to a production process if they are not associated with something that is not a CBAM good. In general, the relevant emissions of an installation must be 100% covered by the production processes of the CBAM goods and, if necessary, other non-CBAM goods. For an installation with more than one relevant production process, if shared equipment, shared 'source streams', or shared emission sources are relevant, the inputs, outputs, and emissions must be attributed to the different production processes with an appropriate split. For example, if an installation produces purified water and 60% of this water is used to produce a CBAM good, 60% of the direct and indirect emissions related to water purification must be attributed to the production of the CBAM good.

Should saleable out-of-specification products be taken into account when determining the level of activity?

If the out-of-specification product is saleable and corresponds to the category of CBAM goods (as listed in Implementing Regulation (EU) 2023/1773) of the production process, it must be included in the level of activity.

Cement

Is cement defined as a complex good under CBAM?

Yes. Cement is defined as a complex good under CBAM because clinker is a precursor to cement and clinker is itself covered by CBAM.

Fertilisers

Are exothermic chemical reactions involved in fertiliser production accounted for as direct emissions?

If a reaction leads to the production of CO2 through the oxidation of organic chemicals and the CO2 is released, it is accounted for as a direct emission. Emissions from the conversion of natural gas for hydrogen production are also considered direct emissions.

Can bound CO2 in urea be counted as negative emissions?

No. Under the EU ETS, bound CO2 in urea is not counted as negative emissions. Therefore, no deductions apply for bound CO2 in urea for the purpose of reporting emissions under CBAM. This also means that CO2 transferred to urea production is counted as emissions under ammonia production.

Electricity as a CBAM Good

Who is the CBAM reporting declarant for electricity imports?

In general, the importer is the person indicated as the 'importer' in the customs declaration. By way of exception, and in accordance with Article 5(4) of the CBAM Regulation, where capacity allocation is explicit for electricity imports, the person to whom capacity is allocated and who nominates that capacity for import is considered the CBAM reporting declarant in the Member State where they declare the import of electricity.

What is the difference between the electricity and CO2 emission factor?

The emission factor for electricity represents the weighted average emission factor of all electricity generation sources (including nuclear and renewable sources) in a geographical area (e.g., third country, group of third countries, or a region within a third country). In contrast, the CO2 emission factor represents the weighted average emission factor of electricity generation sources based on the combustion of fossil fuels. This implies that the CO2 emission factor is larger than the emission factor for electricity for the same geographical area. During the transitional period, the CO2 emission factor is used as the default method for determining the specific direct embedded emissions for electricity as a CBAM good. In comparison, the electricity emission factor is used as the default method for determining the specific indirect emissions for CBAM goods other than electricity.

Which $\text{CO}_2$ emission factors should be used?

The default values for imported electricity are calculated based on the best data available to the Commission, by third country, group of third countries, or determined locations within a third country. The default values for the transitional period include CO2​ emission factors per country based on International Energy Agency (IEA) data, covering a 5-year average, and are provided by the Commission in the CBAM Transitional Registry.

Where a specific default value is not available, the CO2​ emission factor for the EU must be used. This is also based on IEA data and is provided via the CBAM Transitional Registry.

A reporting declarant may determine the CO2​ emission factor according to the methodology defined in the Implementing Regulation when it presents sufficient evidence, based on official and publicly available information, to show that it is lower than the values indicated in the previous paragraphs.

What are the requirements for reporting the actual embedded emissions of electricity, i.e., what is called "conditionality"?

Actual emission data for a specific electricity-generating installation can be used if the requirements of Article 5 of Annex IV of the CBAM Regulation are met (i.e., what is called "conditionality").

The conditions are as follows and it must be noted that these criteria are cumulative:

• The quantity of electricity for which the use of actual embedded emissions is requested is covered by a power purchase agreement between the authorised CBAM declarant and a producer of electricity located in a third country;

• It can be demonstrated that the electricity-generating installation is directly connected to the Union transmission system or that there is no physical network congestion at the moment of export at any point;

• The electricity-generating installation does not emit more than 550 grams of $\text{CO}_2$ of fossil fuel origin per kilowatt-hour of electricity produced;

• The quantity of electricity for which the use of actual embedded emissions is requested has been precisely nominated on the interconnection capacity allocated by all responsible transmission system operators of the country of origin and the electricity produced by the installation and the nominated capacity cover the same period, which should be no longer than one hour.

Are transit countries considered for electricity in CBAM?

For electricity as a CBAM good, the relevant third country is the country of origin where the electricity is produced. No emission factor for the transit country is considered in the CBAM report.

What are the system boundaries for determining the embedded emissions of electricity?

For reporting, only the direct $\text{CO}_2$ emissions occurring during the generation of the electricity are taken into account. Upstream emissions related to, for example, the manufacture and installation of wind turbines are not taken into account.

Hydrogen

What is the link between hydrogen as a CBAM good and the Renewable Energy Directive (EU) 2018/2001 ("RED II")?

The Implementing Regulation includes the provision that a zero emission factor for electricity can be used if "The hydrogen produced is certified in accordance with Commission Delegated Regulation (EU) 2023/1184(1)" (Annex II, Section 3.6). This means that if the hydrogen is certified according to the Renewable Energy Directive to demonstrate that it is certified as a "RFNBO" (renewable fuels of non-biological origin), a second certification is not required.

In the absence of such certification, the indirect emissions must be determined in accordance with Annex III.

Iron and Steel

When calculating the embedded emissions of steel products, are auxiliary processes such as lime kilns or coke ovens included in the scope of the calculation?

The system boundaries for each combined product category can be found in Annex III of the Implementing Regulation (EU) 2023/1773.

Lime kilns and coke ovens are not included in the system boundaries for the production of iron and steel. This is because the outputs of these installations (i.e., lime and coke) are not CBAM goods. Consequently, lime and coke are also not considered a precursor in the calculation of specific embedded emissions.

The production of auxiliary processes, such as purified water and compressed air, is included in the system boundaries.

Are iron ore pellets covered by CBAM?

Yes. Iron ore pellets fall under $\text{CN code 2601 12 00}$ 'Iron ores and concentrates, agglomerated, other than roasted iron pyrites.' They are considered a precursor ("sintered ore") in the production of pig iron or Direct Reduced Iron (DRI).¹

Aluminium/Steel²

Should the specific embedded emissions of aluminium/st³eel products be determined separately for different alloy grades?

Specific embedded emissions are generally determined per combined product category, unless different production methods are used within the installation. Combined product categories may include products with different CN codes. Within the same CN code, the content of alloying elements or the input scrap share may vary. Nevertheless, during the transitional period, the embedded emissions may be reported per combined product category.

Businesses may voluntarily opt to determine more detailed specific embedded emissions for specific products or groups of products.

Customs

Can an importer use different customs representatives for the customs declaration and for the CBAM reporting?

In terms of the reporting requirements applied during the transitional period, the CBAM Regulation (Article 5) foresees the possibility for importers of CBAM goods to appoint direct or indirect customs representatives within the meaning of Article 18 of the Union Customs C⁴ode (refer to Regulation ($\text{EU}$) No 952/2013 for this purpose):

• In the case of direct representation, the importer established in the $\text{EU}$ remains subject to the CBAM obligations while the direct customs representative remains the customs declaration declarant.

• If an importer established in the $\text{EU}$ appoints an indirect customs representative, and the indirect representative agrees to it, the reporting obligations apply to that indirect customs representative.

• If the importer is not established in an $\text{EU}$ Member State, the reporting obligations apply to the indirect customs representative in any case.

It would thus be possible for an importer established in an EU Member State to use different customs representatives for the customs declaration and for the CBAM reporting—for instance, if a direct customs representative lodges the customs declaration while an indirect customs representative is appointed to perform the CBAM reporting. In such cases, the direct representative should indicate the indirect customs representative in the customs declaration. However, there is no possibility during the transitional period to have more than one indirect customs representative for CBAM goods covered by the same customs declaration.

For an importer established outside the EU, the indirect customs representative would be responsible for both the customs declaration and the CBAM declaration.

What happens if an indirect customs representative does not agree to assume the CBAM reporting obligations?

This is only possible if the importer is established in the EU. Conversely, if the importer is not established in the EU, the indirect customs representative must assume the CBAM reporting obligations.

Article 8.3 of the Implementing Regulation states that if indirect customs representatives do not agree to assume the CBAM reporting obligations, they must inform the importer about the reporting obligation.

If such notification is not given to the importer, the indirect customs representative remains liable for the reporting obligation.

Can a direct customs representative be a CBAM reporting declarant for companies established in the $\text{EU}$ territory?

EU importers can indeed appoint direct or indirect customs representatives. However, the obligations concerning CBAM reporting (under the CBAM Regulation and the Implementing Regulation) fall either on the importer or on the indirect representative, provided the indirect representative agrees to such a task (for the transitional period, please refer to Article 32 of Regulation (EU) 2023/956).

Even in the case where the importer appoints a direct customs representative, the importer remains responsible for the CBAM reporting obligation. In other words, the importer remains the declarant for CBAM purposes.

Nothing prevents importers from appointing service providers who can assist them in preparing and submitting CBAM reports in practice, but the responsibility for complying with the CBAM reporting obligations remains with the importers, or the indirect representatives, as the case may be.

Is there an obligation for customs representatives to check whether their clients are CBAM registered declarants before lodging a customs declaration?

The lodging of a customs declaration to the customs authorities by a person (importer or customs representative) entails, according to Article 15(2) of the EU Customs Code (UCC), that the person concerned is responsible for (a) the accuracy and completeness of the information given in the declaration; (b) the authenticity, accuracy and validity of the supporting documents; (c) compliance with all the obligations relating to the placement of the goods under the customs procedure concerned or the carrying out of authorised processing operations, where applicable.

This also applies to the obligation to provide information in another form, which includes any information submitted to the customs authorities. Based on the above, it is beneficial for the direct customs representative to check whether the person on whose behalf the declaration is lodged meets the requirements of the CBAM Regulation before lodging the customs declaration for the release for free circulation of CBAM goods.

My company is registered in one $\text{EU}$ Member State but imports $\text{CBAM goods}$ through several Member States. Should I consolidate these imports into one single quarterly report?

During the transitional period, the CBAM declarant is responsible for submitting quarterly CBAM reports containing information on the embedded emissions of all imported CBAM goods. CBAM goods are attributed to a CBAM declarant through the EORI number presented to the customs authorities. In the scenario provided, there is only one company and one EORI number, including goods imported in different EU Member States. The quarterly CBAM report must therefore consolidate the information on the embedded emissions of all CBAM goods imported by this company, even if the goods were imported in different EU Member States.

Importers may choose to appoint a third-party customs representative, and if that representative agrees to assume the reporting obligation, they will have to present their own EORI number during the import of CBAM goods and perform the CBAM obligations on behalf of the importer for the import of these goods.

Should goods transiting between $\text{EU}$ countries be reported under CBAM?

No. Only goods that are released for free circulation into the $\text{EU}$ are subject to CBAM, not goods that transit within the $\text{EU}$.

CBAM Products Entering Free Circulation in the EU Due to Non-Compliant Reasons

If CBAM products enter free circulation in the EU due to a reason that does not comply with EU customs procedures, and all duties and charges have already been paid through the non-compliant procedure, does the CBAM reporting obligation still apply?

The release of goods into free circulation requires that CBAM requirements be fulfilled. Therefore, checks regarding whether these requirements have been met must take place before the goods are released into free circulation.

In a non-compliant situation, Article 198(1)(b) of the Union Customs Code applies (i.e., "customs authorities shall take any measures necessary, including seizure, sale, or destruction, in cases where products cannot be released due to prohibitions or restrictions"), because the products are subject to CBAM requirements that have not been fulfilled.

In this case, Article 198(2) of the Union Customs Code also applies (i.e., "third-country products that are abandoned to the State, seized, or subject to forfeiture shall be considered to have been placed under customs warehousing procedure").

Reporting CBAM Products under the Inward Processing Regime

Do I need to report CBAM products under the inward processing regime?

CBAM applies only to products released for free circulation in the EU. Therefore, CBAM obligations do not arise for CBAM products placed under a customs suspension regime for future exports or processing.

However, if a CBAM product under inward processing leaves the regime for placement on the EU market, a CBAM obligation does arise.

Additionally, in a specific case where a CBAM product under inward processing is subsequently released into free circulation in the EU (as per Article 6 of the Implementing Regulation), a CBAM reporting obligation also arises. In this special case, the CBAM report will include information on the quantities and embedded emissions of CBAM products under inward processing (Articles 6(f) and (g) of the CBAM Regulation). However, for example, if the processed products themselves are not CBAM products, the report will not include information on the quantities or embedded emissions of the final products released into free circulation (i.e., Articles 6(a) and (b) do not apply).

Definitive Period

How does CBAM work in the definitive period?

CBAM will reflect ETS based on certificates purchased by importers. The price of the certificates will be calculated based on the weekly average auction price of EU ETS allowances and expressed in € per ton of CO₂ equivalent. Importers must register either individually or through a representative to participate in CBAM and purchase CBAM certificates. Certificates submitted by the CBAM declarant must correspond to the embedded emissions of the relevant products expressed in tons of CO₂. Additionally, certificates can be purchased throughout the year.

CBAM certificates will be sold by each EU Member State to CBAM declarants authorized in that Member State. Only authorized CBAM declarants will be able to purchase certificates. These certificates must be submitted through CBAM registration for imports that occurred in 2026, for the first time in 2027.

Reporting of embedded emissions is expected to continue only through the online CBAM portal, as in the transitional period.

Obligations of Importers During the Definitive Period

In the definitive period, only authorized CBAM declarants can import products into the EU (Article 4 of the CBAM Regulation). According to Article 5 of the CBAM Regulation, an authorized CBAM declarant is:

• If the importer is not established in an EU Member State: an indirect customs representative;

• If the importer is established in an EU Member State: the importer themselves or, subject to agreement, an indirect customs representative.

This means that if the importer is not established in an EU Member State and the indirect customs representative is not an authorized CBAM declarant, the relevant CBAM products cannot be imported into the EU.

Will Imports Be Prohibited If the EU Importer Is Not Authorized?

Yes. Article 25 of the CBAM Regulation states that "customs authorities must not allow imports by any person who is not an authorized CBAM declarant."

How is the CBAM Report Submitted in the Definitive Period?

The CBAM report is submitted by the authorized CBAM declarant through the CBAM Registry. For the definitive period, the "CBAM Transitional Registry" will be replaced by the "CBAM Registry."

Access to the CBAM Registry in the Definitive Period

When an importer’s application is approved by the competent authority, they are recognized as an authorized CBAM declarant. Each CBAM declarant will receive a CBAM account number assigned by the Commission, which allows access to the CBAM Registry.

Role of the European Commission in the Definitive Period

As in the transitional period, the Commission will continue to manage the CBAM Registry, review submitted CBAM reports, communicate potential issues with national competent authorities, and monitor implementation and risk of circumvention.

Additionally, the Commission will operate a central platform to sell CBAM certificates to importers. Economic operators can submit certificates purchased through this platform.

Will the EU Expand CBAM’s Scope?

At the end of the CBAM transitional period (end of 2025), the Commission will conduct a full review of CBAM implementation. Using data collected during this period, it will carefully consider extending CBAM to other products and sectors covered by the EU ETS that are at risk of carbon leakage (see Article 30(2) of the CBAM Regulation). Expansion would require a legislative proposal from the Commission and approval by the European Parliament and the Council via amendment of the CBAM Regulation.

Authorization of CBAM Declarants

An applicant is authorized as a CBAM declarant by the competent authority in their Member State if they meet the following criteria:

• No serious or repeated breaches of customs law, tax rules, market abuse rules, or the CBAM Regulation;

• Proof of financial and operational capacity;

• The application is submitted in the Member State where they are established;

• An EORI number has been assigned.

A consultation process is required prior to authorization and must not exceed 15 working days. During the transitional period, secondary legislation will provide further details on the authorization procedure (see Article 17(10) of the CBAM Regulation).

How EU Importers Can Prepare

Non-EU producers must provide information on CBAM products to their registered EU importers. If the data is unavailable at the time of import, EU importers can use default values to determine the necessary certificates. However, providing actual calculations of embedded emissions is advantageous.

Ensuring Reliability of Reported Information

The Commission, in cooperation with Member State authorities, will continuously monitor reported emissions and trade, detect non-compliance and circumvention of the CBAM Regulation. Verification will be conducted in the definitive period, and reports will include information on emission quantities and allocation to products.

During the definitive period, reported embedded emissions must be verified by an accredited verifier according to verification rules (to be defined by the Commission during the transitional period). The verifier prepares a verification report. CBAM declarations are submitted together with copies of verification reports.

If a CBAM declarant fails to comply with the Regulation and introduces products into the EU customs territory, penalties will apply.

Verifier Accreditation

The European Commission will establish secondary legislation defining accreditation and verification rules. This legislation will include:

1. Two implementing acts defining verification principles and alignment with EU ETS and CBAM scopes (Articles 8 and 18 of the CBAM Regulation).

2. A delegated act defining conditions for verifier accreditation (Article 18 of the CBAM Regulation).

Free Allocations and CBAM Liability

Rules on how free allocations will be included in the calculation of CBAM liability will be developed by the European Commission under the authorization of Article 31(2) of the CBAM Regulation.

Deduction of Carbon Prices Paid in Third Countries

An authorized CBAM declarant may request a reduction in the number of CBAM certificates to reflect the carbon price effectively paid in the country of origin for the declared embedded emissions.

The CBAM Regulation defines carbon price broadly as "a monetary amount paid in a third country under a greenhouse gas emissions trading system or as a tax, levy, or fee."

Only carbon prices effectively paid in the country of origin will count towards reducing CBAM certificates. Any benefit claimed by the declarant must also be considered to determine whether the carbon price was effectively paid.

Before the end of the 2025 transitional period, the Commission will adopt implementing measures detailing the calculation of carbon prices effectively paid in the country of origin (see Article 9(4) of the CBAM Regulation).